Renewable Energy Projects in Estonia: A Strategic Reference, 2006

Renewable Energy Projects in Estonia: A Strategic Reference, 2006 Edited by Philip M. Parker, Ph.D. Chaired Professor ...

Author: Philip M. Parker

16 downloads 719 Views 708KB Size Report

This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form

DOWNLOAD PDF

Renewable Energy Projects in Estonia: A Strategic Reference, 2006

Edited by

Philip M. Parker, Ph.D. Chaired Professor of Management Science INSEAD (Fontainebleau & Singapore)

www.icongrouponline.com

©2006 Icon Group International, Inc.

ii

COPYRIGHT NOTICE ISBN 0-497-35934-0 All of ICON Group International, Inc. publications are copyrighted. Copying our publications in whole or in part, for whatever reason, is a violation of copyrights laws and can lead to penalties and fines. Should you want to copy tables, graphs, or other materials from our publications, please contact us to request permission. ICON Group International, Inc. often grants permission for very limited reproduction of our publications for internal use, press releases, and academic research. Such reproduction requires, however, confirmed permission from ICON Group International, Inc. Please read the full copyright notice, disclaimer, and user agreement provisions at the end of this report.

IMPORTANT DISCLAIMER

Neither ICON Group International, Inc. nor its employees can be held accountable for the use and subsequent actions of the user of the information provided in this publication. Great efforts have been made to ensure the accuracy of the data, but we cannot guarantee, given the volume of information, accuracy. Since the information given in this report is forward-looking, the reader should read the disclaimer statement and user agreement provisions at the end of this report.



iii

About Icon Group International, Inc. Icon Group International, Inc.’s primary mission is to assist managers with their international information needs. U.S.-owned and operated, Icon Group has field offices in Paris, Hong Kong, and Lomé, Togo (West Africa). Created in 1994, Icon Group has published hundreds of multi-client databases, and global/regional market data, industry and country publications. Global/Regional Management Studies: Summarizing over 190 countries, management studies are generally organized into regional volumes and cover key management functions. The human resource series covers minimum wages, child labor, unionization and collective bargaining. The international law series covers media control and censorship, search and seizure, and trial justice and punishment. The diversity management series covers a variety of environmental context drivers that effect global operations. These include women’s rights, children’s rights, discrimination/racism, and religious forces and risks. Global strategic planning studies cover economic risk assessments, political risk assessments, foreign direct investment strategy, intellectual property strategy, and export strategies. Financial management studies cover taxes and tariffs. Global marketing studies focus on target segments (e.g. seniors, children, women) and strategic marketing planning. Country Studies: Often managers need an in-depth, yet broad and up-to-date understanding of a country’s strategic market potential and situation before the first field trip or investment proposal. There are over 190 country studies available. Each study consists of analysis, statistics, forecasts, and information of relevance to managers. The studies are continually updated to insure that the reports have the most relevant information available. In addition to raw information, the reports provide relevant analyses which put a more general perspective on a country (seen in the context of relative performance vis-à-vis benchmarks). Industry Studies: Companies are racing to become more international, if not global in their strategies. For over 2000 product/industry categories, these reports give the reader a concise summary of latent market forecasts, pro-forma financials, import competition profiles, contacts, key references and trends across 200 countries of the world. Some reports focus on a particular product and region (up to four regions per product), while others focus on a product within a particular country.



iv

Table of Contents 1

INTRODUCTION & METHODOLOGY.............................................................................1

1.1

What Does This Report Cover?

1

1.2

How to Strategically Evaluate Estonia

1

1.3

Latent Demand and Accessibility in Estonia

3

2

RENEWABLE ENERGY PROJECTS IN ESTONIA.........................................................5

2.1 Latent Demand and Accessibility 5 2.1.1 Animal Waste Biogas Projects ................................................................................................................... 5 2.1.2 Landfill Biogas Project............................................................................................................................... 6 2.1.3 Future Trends and Goals ............................................................................................................................ 6 2.1.4 Eesti Energia Wind Farm ........................................................................................................................... 6

3

FINANCIAL INDICATORS: ELECTRIC SERVICES......................................................7

3.1 Overview 7 3.1.1 Financial Returns and Gaps in Estonia....................................................................................................... 7 3.1.2 Labor Productivity Gaps in Estonia ......................................................................................................... 10 3.1.3 Limitations and Extensions ...................................................................................................................... 11 3.2 Financial Returns in Estonia: Asset Structure Ratios 12 3.2.1 Overview .................................................................................................................................................. 12 3.2.2 Assets – Definitions of Terms .................................................................................................................. 12 3.2.3 Asset Structure: Outlook .......................................................................................................................... 15 3.2.4 Large Variances: Assets ........................................................................................................................... 16 3.2.5 Key Percentiles and Rankings .................................................................................................................. 19 3.3 Financial Returns in Estonia: Liability Structure Ratios 34 3.3.1 Overview .................................................................................................................................................. 34 3.3.2 Liabilities and Equity – Definitions of Terms .......................................................................................... 34 3.3.3 Liability Structure: Outlook ..................................................................................................................... 36 3.3.4 Large Variances: Liabilities ..................................................................................................................... 37 3.3.5 Key Percentiles and Rankings .................................................................................................................. 40 3.4 Financial Returns in Estonia: Income Structure Ratios 53 3.4.1 Overview .................................................................................................................................................. 53 3.4.2 Income Statements – Definitions of Terms .............................................................................................. 53 3.4.3 Income Structure: Outlook ....................................................................................................................... 55 3.4.4 Large Variances: Income.......................................................................................................................... 56 3.4.5 Key Percentiles and Rankings .................................................................................................................. 59 3.5 Financial Returns in Estonia: Profitability Ratios 74 3.5.1 Overview .................................................................................................................................................. 74 3.5.2 Ratios – Definitions of Terms .................................................................................................................. 74 3.5.3 Ratio Structure: Outlook .......................................................................................................................... 76 3.5.4 Large Variances: Ratios ........................................................................................................................... 77 3.5.5 Key Percentiles and Rankings .................................................................................................................. 80 3.6

Productivity in Estonia: Asset-Labor Ratios


95 ©2006 Icon Group International, Inc.

Contents 3.6.1 3.6.2 3.6.3 3.6.4

v

Overview .................................................................................................................................................. 95 Asset to Labor: Outlook ........................................................................................................................... 96 Asset to Labor: International Gaps........................................................................................................... 97 Key Percentiles and Rankings ................................................................................................................ 100

3.7 Productivity in Estonia: Liability-Labor Ratios 115 3.7.1 Overview ................................................................................................................................................ 115 3.7.2 Liability to Labor: Outlook .................................................................................................................... 116 3.7.3 Liability and Equity to Labor: International Gaps.................................................................................. 117 3.7.4 Key Percentiles and Rankings ................................................................................................................ 120 3.8 Productivity in Estonia: Income-Labor Ratios 133 3.8.1 Overview ................................................................................................................................................ 133 3.8.2 Income to Labor: Outlook ...................................................................................................................... 134 3.8.3 Income to Labor: Gaps ........................................................................................................................... 135 3.8.4 Key Percentiles and Rankings ................................................................................................................ 138

4 4.1

MACRO-ACCESSIBILITY IN ESTONIA.......................................................................154 Executive Summary

154

4.2 Economic Fundamentals and Dynamics 154 4.2.1 Government Intervention Risks.............................................................................................................. 154 4.2.2 Infrastructure Development.................................................................................................................... 154 4.3 Political Risks 155 4.3.1 The Political System............................................................................................................................... 155 4.3.2 Economic Relationship with the United States ...................................................................................... 156 4.4 Marketing Strategies 156 4.4.1 Distribution Channel Options................................................................................................................. 156 4.4.2 Agents and Distributors.......................................................................................................................... 156 4.4.3 Direct Marketing Options....................................................................................................................... 156 4.4.4 Joint Ventures and Licensing Options.................................................................................................... 157 4.4.5 Creating a Sales Office........................................................................................................................... 157 4.4.6 Selling Strategies.................................................................................................................................... 157 4.4.7 Advertising and Trade Promotion .......................................................................................................... 157 4.4.8 Trade Promotion..................................................................................................................................... 157 4.4.9 Pricing Issues.......................................................................................................................................... 157 4.4.10 Public Sector Marketing......................................................................................................................... 158 4.4.11 Intellectual Property Risks ..................................................................................................................... 158 4.4.12 Hiring Local Counsel ............................................................................................................................. 159 4.5 Import and Export Regulation Risks 159 4.5.1 Trade Barrier Risks ................................................................................................................................ 159 4.5.2 Valuations on Imports ............................................................................................................................ 160 4.5.3 Documentation Required for Trade........................................................................................................ 160 4.5.4 Entering Temporary Imports .................................................................................................................. 160 4.5.5 Labeling Issues....................................................................................................................................... 160 4.5.6 Restrictions on Imports .......................................................................................................................... 161 4.5.7 Local Standards ...................................................................................................................................... 161 4.5.8 Free Trade Zone Options........................................................................................................................ 161 4.5.9 Additional Trade Issues.......................................................................................................................... 161 4.5.10 Adherence to Free Trade Agreements .................................................................................................... 162 www.icongrouponline.com


Contents

vi

4.6 Investment Climate 162 4.6.1 Openness to Foreign Investment ............................................................................................................ 162 4.6.2 Conversion and Transfer Policies........................................................................................................... 162 4.6.3 Expropriation and Compensation ........................................................................................................... 163 4.6.4 Dispute Settlement ................................................................................................................................. 163 4.6.5 Performance Requirements and Incentives ............................................................................................ 163 4.6.6 Right to Private Ownership and Establishment ...................................................................................... 163 4.6.7 Intellectual Property Risks ..................................................................................................................... 164 4.6.8 Transparency of the Regulatory System................................................................................................. 164 4.6.9 Capital Market Risks .............................................................................................................................. 164 4.6.10 Political Violence ................................................................................................................................... 165 4.6.11 Corruption .............................................................................................................................................. 165 4.6.12 Bilateral Investment Agreements ........................................................................................................... 165 4.6.13 OPIC and Other Investment Insurance................................................................................................... 165 4.6.14 Labor ...................................................................................................................................................... 166 4.6.15 Free Trade Zone Options........................................................................................................................ 166 4.7 Trade and Project Financing 166 4.7.1 The Banking System .............................................................................................................................. 166 4.7.2 Foreign Exchange Control Risks............................................................................................................ 167 4.7.3 General Financing Availability .............................................................................................................. 167 4.7.4 Financing Export Strategies ................................................................................................................... 167 4.7.5 Banks with Correspondent Banking Arrangements ............................................................................... 167 4.8 Travel Risks 167 4.8.1 Local Business Practices ........................................................................................................................ 167 4.8.2 Travel Issues........................................................................................................................................... 167 4.8.3 Infrastructure for Conducting Business.................................................................................................. 168 4.8.4 Country Data .......................................................................................................................................... 168 4.9 Key Contacts 169 4.9.1 U.S. and Local Contacts ......................................................................................................................... 169 4.9.2 Chambers of Commerce......................................................................................................................... 170 4.9.3 Trade Associations ................................................................................................................................. 170 4.9.4 Estonian Government Agencies ............................................................................................................. 171 4.9.5 Commercial Banks ................................................................................................................................. 173 4.9.6 Contacts in Washington D.C. ................................................................................................................. 174 4.9.7 Market Research Firms .......................................................................................................................... 174

5

DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS .........175

5.1

Disclaimers & Safe Harbor

175

5.2

Icon Group International, Inc. User Agreement Provisions

176



1

1 1.1

INTRODUCTION & METHODOLOGY WHAT DOES THIS REPORT COVER?

The primary audience for this report is managers involved with the highest levels of the strategic planning process and consultants who help their clients with this task. The user will not only benefit from the hundreds of hours that went into the methodology and its application, but also from its alternative perspective on strategic planning relating to renewable energy projects in Estonia. As the editor of this report, I am drawing on a methodology developed at INSEAD, an international business school (www.insead.edu). For any given industry or sector, including renewable energy projects, the methodology decomposes a country’s strategic potential along four key dimensions: (1) latent demand, (2) micro-accessibility, (3) proxy operating pro-forma financials, and (4) macro-accessibility. A country may have very high latent demand, yet have low accessibility, making it a less attractive market than many smaller potential countries having higher levels of accessibility. With this perspective, this report provides both a micro and a macro strategic profile of renewable energy projects in Estonia. It does so by compiling published information that directly relates to latent demand and accessibility, either at the micro or macro level. The reader new to Estonia can quickly understand where Estonia fits into a firm’s strategic perspective. In Chapter 2, the report investigates latent demand and micro-accessibility for renewable energy projects in Estonia. In Chapters 3 and 4, the report covers proxy operating pro-forma financials and macro-accessibility in Estonia. Macro-accessibility is a general evaluation of investment and business conditions in Estonia.

1.2

HOW TO STRATEGICALLY EVALUATE ESTONIA

Perhaps the most efficient way of evaluating Estonia is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to renewable energy projects are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).



Introduction & Methodology

2

Framework for Prioritizing Countries Demand/Market Potential Driven Firm

High

Highest Priority

High Priority Latent Demand

Moderate Priority Low Priority

Low

Lowest Priority Low

High Relative Accessibility

Accessibility/Supply Averse Firm High Highest Priority High Priority Latent Demand

Moderate Priority Low Priority Lowest Priority

Low High

Low Relative Accessibility



Introduction & Methodology

3

In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market – neither a market-driven nor a costdriven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).

1.3

LATENT DEMAND AND ACCESSIBILITY IN ESTONIA

This report provides a detailed overview of factors driving latent demand and accessibility for renewable energy projects in Estonia. Latent demand is largely driven by economic fundamentals specific to renewable energy projects. This topic is discussed in Chapter 2 using work carried out in Estonia on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for renewable energy projects in Estonia. I use the term “micro” since the discussion is focused specifically on renewable energy projects. Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Estonia. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Estonia. The numbers are only indicative of an average firm whose primary activity is in Estonia. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Estonia. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “electric services”, as defined in Chapter 3. Again, while “electric services” does not exactly equate to “renewable energy projects”, it nevertheless gives an indicator of how Estonia compares to other countries for a proxy adjacent category along various dimensions. Chapter 4 deals with macro-accessibility and covers factors that go beyond renewable energy projects. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Estonia: •

Openness to Trade in Estonia

•

Openness to Direct Investment in Estonia

•

Local Marketing and Entry Strategy Alternatives

•

Local Human Resources



Introduction & Methodology •

4

Local Risks

Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Estonia. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Estonia. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.



5

2 2.1

RENEWABLE ENERGY PROJECTS IN ESTONIA LATENT DEMAND AND ACCESSIBILITY

The share of renewable energy in Estonia’s total electricity balance has been approximately 0.3-0.4% of the total net generation. Estonia seeks to increase its share of electricity production from renewable energy sources to 5.1 % of its annual consumption by 2010. The national target of 12 % of gross national energy consumption by 2010, which was listed in the EU Directive of Renewable Energy Sources, has already been achieved as the usage of wood and wood waste for heat production in Estonia is relatively high. To support the increase of the electricity production from renewable sources the domestic Electricity Market Act provides a support scheme through the obligation of distribution companies to buy the electricity produced from renewable sources with a price 1.8-times the average sales price of the Narva Power Plants. Estonia has also committed to achieve the targets set out in the new Directive 2003/30/EC of the European Parliament and of the Council from May 8, 2003, on the promotion of the use of biofuels or other renewable fuels for transport.

2.1.1

Animal Waste Biogas Projects

The Animal waste biogas project on Saaremaa island seeks to improve animal waste management practices through the utilization of the waste as a resource by processing manure and other organic wastes into biogas for energy use using anaerobic digestion technology and producing a mineral enriched natural fertilizer. The Animal Waste Biogas project is a Joint Implementation project developed between Estonia and the investor countries of the Baltic Sea Region Testing Ground Facility (Iceland, Norway, Sweden, Denmark, Finland and Germany). Emission reductions of 88,000 tCO2e are expected from the project over the contracted period 2006-2012. These emission reductions include methane from improved waste management practices, avoided N2O emissions from manure storage and from agricultural soils and avoided CO2 from grid supplied electricity (which in Estonia is principally from carbon intensive oil shale fired generation). The project developer and owner is the Estonian company OÜ Saare Economics, which has been advised on carbon issues by the Norwegian company ECON Carbon. This is a first of its kind environmental infrastructure project in Estonia which promotes advanced waste treatment technology with a sustainable energy component. While a small project in absolute terms, it has significant replication potential throughout the Baltic Sea Region. Further project information is available at www.nefco.org/tgf. Based on the data of the Statistical Office of Estonia, the number of poultry in the country is 2.26 million, cows and cattle 0.41 million, sows and fatling pigs 0.33 million. Considering that 60 % of the total amount of animal manure could be handled at biogas stations in future, the potential of primary energy from biogas is ~0,4 TWh/y. There is also a plan to start building, in August 2006, a new fully automatic milking farm near the town of Tartu where one part of the process would be the production of the electricity from cow manure.



Renewable Energy Projects

2.1.2

6

Landfill Biogas Project

Tallinn, Estonia’s capital, is the largest city in Estonia with a population of about 400 000 inhabitants. Annually 200 - 220 thousand tons of organic waste is generated in Tallinn, which, until 2005 was stored in the Pääsküla landfill. The Pääsküla landfill was opened in 1962 and today its area is about 25 ha with the average height of garbage layer up to 40 meters. The Pääsküla landfill was closed in 2005. In 1994 the gas company Eesti Gaas Ltd and some private investors began a biogas-producing project in Pääsküla. A new company, Terts Ltd, was founded in 1993. A cogeneration heat and power station (CHP), owned by Terts Ltd, was opened in December 5, 2001 using biogas from the landfill. This station uses an Otto gas engine from the company Jenbacher (Austria). CHP electrical output is 836 kW and thermal output is 1 050 kW

2.1.3

Future Trends and Goals

•

Installation of new CHP plant to the new landfill of Tallinn (Jõelähtme). Estimated start of project after the year 2006.

•

Installation of new CHP plant near Tallinn, running on biogas produced from chicken and cattle manure 2005 2006.

2.1.4

Eesti Energia Wind Farm

Eesti Energia has started preparations to set up a wind farm with a capacity of 50 megawatts on an ash field in the northeast Estonian industrial region near Narva. The state-owned energy utility has announced a public tender seeking the party to draft the investment project and carry out necessary surveys. The tender covers the drawing up a description of the present situation and conducting viability and environmental impact studies. Also, solutions for linking the wind farm with the electricity transmission grid must be found. The provider of the service must also draw up the investment project and application for funds from the EU. Offers will be accepted until March 28. The wind farm would be the largest such complex in Estonia. In April 2005 an 18.4-megawatt wind farm was completed on the Pakri peninsula near the town of Paldiski in northwestern Estonia at an approximate cost of EUR 24 mln. The wind farm consists of eight generators with a capacity of 2.3 megawatts each.



7

3 3.1

FINANCIAL INDICATORS: ELECTRIC SERVICES OVERVIEW

Is Estonia competitive? With the globalization of markets, the increased mobility of corporate assets, and the need for productive human resources, this question has become all the more complex to answer. The financial indicators section was prepared to tackle this question by focusing on certain fundamentals: financial performance and labor productivity. Rather than focus on the economy as a whole, the analysis presented here considers only one sector: electric services. We are essentially interested in the degree to which firms operating in Estonia have fundamentally different financial structures and performance compared to firms located elsewhere. With respect to this view of competitiveness, if one were to invest or operate in Estonia, how would the firm’s asset structure likely vary compared to a firm operating in some other country in Europe or average location in the world? In Estonia, do firms typically hold more cash and other short term assets, or do they concentrate their assets in physical plant and equipment? On the liability side, do firms operating in Estonia have a higher percent of payables compared to other firms operating in Europe, or do they hold a higher concentration of long term debt? The structure of the income statement is also telling. Do firms operating in Estonia have relatively higher costs of goods sold, operating costs, or income taxes compared to firms located elsewhere in the region or the world in general? Are returns on equity higher in Estonia? Are profit margins greater? Are inventories held longer? The financial indicators section was designed to answer these and similar questions that naturally affect one’s decision to invest or operate in Estonia. Again, we are particularly interested in electric services, and not the economy as a whole. In many instances, people make all the difference. In addition to financial competitiveness, we consider the extent to which labor deployment and productivity in Estonia differs from regional and global benchmarks. In this case, we are interested in the amount of labor required to operate a typical business in Estonia and the likely returns on this human investment. What is the typical ratio of short-term and long-term assets to employee (employed in electric services operations)? What are typical capital-labor ratios? How different are these ratios to those in Europe in general and the world as a whole? What are the average sales and net profits per employee in Estonia compared to regional benchmarks? The goal of this section is to assist managers in gauging the competitive performance of Estonia at the global level for electric services. With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark Estonia against other countries on a worldwide basis. Doing so, however, is not an obvious task. This report generates international benchmarks and measures gaps that might be revealed from such an exercise. First, data is collected from companies across all regions of the world. For each of these firms, data are standardized into comparable categories (assets, liabilities, income and ratios), by country, region and on a worldwide basis. From there, we eliminate all currency effects by standardizing within each category. Global benchmarks are then compared to those estimated for electric services in Estonia. Though we heavily rely on historical performance, the figures reported are not historical but are forecasts and projections for the coming fiscal year.

3.1.1

Financial Returns and Gaps in Estonia

The approach used in this report to evaluate operating performance for electric services in Estonia is called "vertical analysis." For those unfamiliar with this type of analysis, frequently taught in graduate schools of business, the



Financial Indicators

8

reader is recommended Jae K. Shim and Joel G. Siegel’s recent book titled Financial Management.1 In their discussion of financial statement analysis and ratios, Skim and Siegel (p. 42-43), describe common-size statement (vertical analysis) as follows: A common-size statement is one that shows each item in percentage terms. Preparation of common-size statements is known as vertical analysis, in which a material financial statement item is used as a base value and all other accounts on the financial statement are compared to it. In the balance sheet, for example, total assets equal 100 percent, and each individual asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders’ equity are assigned a value of 100 percent and each liability or equity account is then stated as a percentage of total liabilities and stockholders’ equity, respectively. … For the income statement, a value of 100 percent is assigned to net sales, and all other revenues and expense accounts are related to it. It is possible to see at a glance how each dollar of sales is distributed among various costs, expenses, and profits. The authors suggest that vertical analyses involve industry-based comparisons. Such a comparison “allows you to answer the question, ‘How does a business fare in the industry?’ You must compare the company’s ratios to… industry norms.” (p. 43-44) This approach is extended to country competitiveness (in this case Estonia) for a particular sector (in this case electric services). This involves calculating country, regional and global norms. This introduction will describe the seven-stage methodology used to perform this analysis. Each stage should be seen as a working assumption behind the numbers presented in later chapters. Stage 1. Industry Classification. This stage begins by classifying the company into an industry. For this, we have relied on a combination of the North American Industry Classification System (NAICS pronounced “Nakes”), a relatively new system for classifying business establishments, and the older Standard Industrial Classification (SIC) system. Adopted in 1997, NAICS codes are the new industry classification codes used by statistical agencies of the United States. NAICS was developed jointly by the U.S., Canada, and Mexico to provide comparability in statistics about business activity across North America. After 60 years of service, the outdated SIC system was retired on October 1, 2000, leaving only the NAICS codes for official use. The NAICS classification system adds some 350 new industries and represents a revision to over 60% of the previous SIC industries. Despite its official retirement, the SIC system is still commonly used (and often reported in firm’s financial statements). For most companies in the world, classification within either the new NAICS or older SIC systems is a rather straight forward exercise. For some, however, it can be problematic. This is true for several reasons. The first being that the SIC or NAICS classification systems are rather broad for many product and industry categories (a firm’s products or services may be only a minor aspect of the classification’s definition). The second is that some firms’ activities span multiple codes. Finally, it is possible that a firm is classified by one source using its SIC code, and by another using its NAICS code, and by a third using both. Furthermore, some sources do not report either code, but instead use qualitative statements of the firm’s activities. Nevertheless, if one wishes to pursue a vertical analysis, some classification needs to take place which selects a peer group. In making this classification, one can rely on a number of sources. In some countries, firms must “self” classify in official periodic reports (e.g. annular reports, 10Ks, etc.) to public authorities (such as the Securities and Exchange Commission). These reports are then open for public scrutiny (e.g. EDGAR filings). In other cases, commercial data vendors or private research firms provide SIC/NAICS codes for specific companies. These include: • Bloomberg - www.bloomberg.com • Datastream (Thomson Financial) - www.datastream.com • Dun & Bradstreet - www.dnb.com • Hoovers - www.hoovers.com • HarrisInfoSource - www.HarrisInfo.com • InfoUSA - www.infousa.com • Investext (Thomson Financial) - www.investext.com 1

Skim and Siegel (2000), Financial Management published by Barron’s Educational Series, Inc. (BARON’S BUSINESS LIBRARY Series), ISBN: 0-7641-1402-6. www.icongrouponline.com


Financial Indicators • • • • • •

9

Kompass International Neuenschwander SA. – www.kompass.com Moody's Investors Service - www.moodys.com Primark (Thomson Financial) - www.primark.com Profound (The Dialog Corporation – A Thomson Company) - www.profound.com Reuters - www.reuters.com Standard & Poor's - www.standardandpoors.com

It is interesting to note that commercial vendors often report different qualitative descriptions and industrial classifications from one to another. These descriptions and classifications may also be different from those reported by the firm itself. Anyone hoping to perform a benchmarking study, therefore, has to make a judgment call across these various sources in order to determine a reasonable classification. In this report, we have decided a metaanalytic process, by combining various sources (including linking a classification’s keywords to qualitative descriptions of the firm’s product line). In cases of inconsistency, the most recent or globally comparable available is chosen. Again, the overall goal is to classify firms, which either produce similar products, offer similar services, or are in the same stage of the value chain for a particular industrial classification. In the case of this report, the SIC code selected is: 491;4911; which is defined as “electric services”. This classification should be seen as a working assumption. In order to obtain a more detailed discussion of this classification, the reader is referred to the Web sites developed by the U.S. Census Bureau: http://www.census.gov/epcd/www/naics.html. Basic definitions and descriptions are provided at: http://www.census.gov/epcd/www/drnaics.htm#q1. A full correspondence table between SIC and NAICS codes, and detailed definitions are given at http://www.census.gov/epcd/www/naicstab.htm. Stage 2. Firm-level Data Collection. A global search was conducted across over 20,000 companies in over 40 major economies, including Estonia, for those that report financials (balance sheet and income statements) and that are involved in electric services. It should be noted that the public-domain financials can be either historic or projections. It should also be noted that even historic figures can be modified in the future and often represent “estimates” of performance. Stage 3. Standardization. Once collected, public domain financial figures of firms identified in Stage 2 are standardize into comparable categories (assets, liabilities, and income). Again, these are limited to firms involved in some aspect of electric services (i.e. are members of the value chain). From there, we eliminate all currency effects by standardizing within each category (creating ratios). In order to maintain comparability over time and across countries, vertical analysis is used. In the case of a firm’s assets, we treat the total assets as equaling 100, irrespective of the value of the local currency. All other assets are then calculated as a percent of total assets. In this way, the structure of the firm’s assets can be easily interpreted and compared with international benchmarks. For liabilities, total liabilities and equity are indexed to equal to 100. For the income statement, total revenue is indexed to equal 100, and all other figures are calculated as a percent of these figures. Stage 4. Filtering. Not all the firms selected in Stage 2 or the ratios calculated in Stage 3 are used for the country, regional or global benchmarks, as a number of companies are purposely dropped from the analysis. This is justified by the “outlier” phenomenon that plagues such analysis. The problem lies in that any given company in the benchmarking pool may be facing some exceptional event or may be organized in an exceptional way so as to make its ratios vastly different from the norm. By including such firms, the global benchmarks can be overly skewed. In many countries, firms are organized into holding groups. These groups nominally have very few employees (e.g. 4 to 25 employees), but have extremely large assets, liabilities, or revenues. As such, the inclusion or exclusion of firms having this form of management can affect the ratios and benchmarks reported. Likewise, some firms have no net sales, no assets, no liabilities, or ratios. Others have ratios that appear implausible for a normal or viable company. In order to not allow these firms to affect the global benchmarks, only those firms with reasonable financials have been chosen. Finally, in some countries, detailed financials are not available or are not comparable to either the company in question or the global norm (e.g. various forms of depreciation). In this case, only those which exist and are comparable are reported. The details, therefore, that comprise a given ratio or set of ratios may not be reported. This may lead to the addition of several ratios, not summing to the whole.




10

Stage 5. Calculation of Global Norms. Once the filtering process has eliminated outliers, a final list of companies included is compiled. Based on this list, the ratios discussed in Stage 3 are calculated for every firm, and then averaged to create country, regional and global benchmarks. The world average is calculated using each country’s population as a weight. Stage 6. Projection of Deviations. The goal of this report is not only to estimate raw ratios or averages, but also to present the difference between Estonia and projected global averages for that same ratio. Furthermore, it can be insightful to know the location of each ratio within the distribution of the countries represented in Stage 5. These deviations, in fact, can be seen as projections or likely scenarios for the future. This is often true for two reasons. First, while a company’s financials change from year to year, its ratios are often stable. This is especially true for the country, regional and global benchmarks which represent averages across companies. From a purely Bayesian sense, the difference between the company’s recent ratios and the benchmarks are a reasonable prior for future deviations. This is true, even if the entire industry is hit by an external or exogenous shock, such as an oil crisis or economic slowdown. In other words, we assume that the structure of the variance in the industry’s financials remains stable. Second, many of the data are based on preliminary reports that might be changed in future filings. As forecasts, therefore, the numbers derived from these are also forecasts of past and future performance (with associated uncertainties). The calculation of the difference between a country’s ratios and the global benchmarks is meant to yield roughly approximate forecasts, or "useful measures". Within Europe, the reliability of estimates varies from one country to another for those ratios given in tables that report national averages. This is true because reliable source statistics are not available for all countries in Europe. Countries with the highest reliability, or sample sizes after filtering in Stage 4, include Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Russian Federation, Spain, Sweden, Switzerland, and United Kingdom. Others are generally econometrically extrapolated using models that use country characteristics (e.g. income per capita) as independent variables (i.e. countries having similar economic structures are assumed to have similar operating ratios). Again, the forecasts are based on the assumption of relative stability. This assumption has proven extremely robust in previous applications of this methodology (i.e. today’s weather is a good predictor of tomorrow’s weather, but not the weather three years from now). The results reported should be viewed as those for a “proto-typical” firm operating in Estonia whose primary activity is electric services. Stage 7. Projection of Ranks and Percentiles. Based on the calculation of deviations, relative ranks and percentiles are calculated across the firms used in the benchmarks. The percentile estimates the percent of a representative sample of countries in the world having values of the ratio lower than Estonia. It is important to note that a percentile being high (or low) does not mean good (or bad) past, present or future financial performance. The reader must draw this conclusion on their own. The estimates provided were created to provide managerial insight, and not a recommendation with respect to particular investments within any country. We graphically report, for each part of the financial statement, the larger structural differences between Estonia and the regional and global benchmarks, and provide a summary table of ranks and percentiles. These are estimates for firm which would be involved in electric services. A deviation from the global norm need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or perhaps signal a country's relative strength or weakness for the coming fiscal year.

3.1.2

Labor Productivity Gaps in Estonia

In the case of labor productivity measures, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. The seven stage approach given above is used in a similar manner.




11

We then report, for each part of the financial statement, the larger labor productivity gaps that Estonia has vis-à-vis the worldwide average (for electric services). Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

3.1.3

Limitations and Extensions

Shim and Siegal (p. 60) stress that “while ratio analysis is an effective tool for assessing a company’s financial condition,” operating Estonia or any other country, “its limitations must be recognized.” They find that (p. 59) “no single ratio or group of ratios is adequate for assessing all aspects of a company’s financial condition” operating in a particular country. The authors note the following limitations associated with ratio analyses which apply to the global benchmarking and vertical analysis presented here (p.60): • • • • • • • •

Accounting standards or policies may limit useful comparisons across companies Management accounting practices across companies and countries may not be performed in the same style Ratios are static and do not reveal future trends Ratios do not indicate the quality of the components used to calculate the ratios (i.e. ratios have ambiguous interpretations) Reported ratios may not reflect real values Companies may be highly diversified, limiting the comparability of their ratios to others Industry averages or norms are approximate; finer industry definitions may be required for certain interpretations or comparisons Financial statements and resulting ratios often mean different things to different people depending on their points of view or motivations.

Again, all figures reported here are estimates, so due caution is required. The above caveats, and the fact that statements made in this report are forward-looking, requires that this point be emphasized. A number of intervening factors can have material effect on the ratios and variances forecasted. These include changes in a company's management style, exchange rate volatility, changes in accounting standards, the lack of oversight or comparability in accounting standards, changes in economic conditions, changes in competition, changes in the global economy, changes in source data quality, and similar factors.




3.2 3.2.1

FINANCIAL RETURNS RATIOS

IN

12

ESTONIA: ASSET STRUCTURE

Overview

In this chapter we consider the asset structure of companies involved in electric services operating in Estonia benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of assets is then presented for companies operating in Estonia and the average global benchmarks (total assets = 100 percent). For ratios where there are large deviations between Estonia and the benchmarks, graphics are provided (sometimes referred to as a financial “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis asset ratios are highlighted across countries in the comparison group.

3.2.2

Assets – Definitions of Terms

The following definitions are provided for those less familiar with the asset-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of assets, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accumulated Depreciation - Buildings. Accumulated depreciation is commonly understood as a contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of a fixed asset. Buildings are fixed assets which represent the acquisition and improvement costs of permanent structures owned or held by the company. Such structures typically include office buildings, storage quarters, or other facilities and also associated items such as loading docks, heating and airconditioning equipment, refrigeration equipment, and all other property permanently attached to or forming an integral part of the structure. However, it generally does not include furniture, fixtures, or other equipment which are not an integral part of the building.

•

Accumulated Depreciation - Transportation Equipment. Accumulated depreciation of transportation equipment is commonly understood to be contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of transportation equipment.

•

Accumulated Depreciation -Machinery & Equipment. Accumulated depreciation of machinery and equipment is commonly understood to be contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of machinery and equipment.

•

Buildings. Buildings are defined as fixed assets which represent the acquisition and improvement costs of permanent structures owned or held by the company. Such structures include office buildings, storage quarters, or other facilities and also associated items such as loading docks, heating and air-conditioning equipment, refrigeration equipment, and all other property permanently attached to or forming an integral part of the structure. However, it does not include furniture, fixtures, or other equipment which are not an integral part of the building.

•

Cash. Cash is typically defined as money on hand, on deposit with chartered bank, or held in the form of eligible securities.




13

•

Current Assets. Current assets are generally defined to be resources which are available, or can readily be made available, to meet the cost of operations or to pay current liabilities.

•

Deferred Charges. Deferred charges are generally understood to represent the amount which has been paid for services already received by the company but has not been charged to operations.

•

Finished Goods. Finished goods generally comprise the ready-for-sale inventory.

•

Intangible Other Assets. Intangible assets are generally understood to be nonphysical assets such as legal rights (patents and trademarks) recorded at their historical cost then reduced by systematic amortization.

•

Investments in Unconsolidated Subsidiaries. Investments in unconsolidated subsidiaries are typically defined as investments for the purpose of generating revenue in subsidiaries whose financial statements are not combined with the company's.

•

land. Land is generally considered to be a fixed asset. If land is purchased, its capitalized value typically includes the purchase price plus costs such as legal fees, filling and excavation costs which are incurred to put the land in condition for its intended use. If land is acquired by gift, its capitalized value typically reflects its appraised value at the time of acquisition. Land typically does not include depletable resources.

•

long Term Receivables. Long-term receivables are commonly defined as amounts due within a period exceeding one year from private persons, businesses, agencies, funds, or governmental units which are expected to be collected in the form of moneys, goods, and/or services.

•

Machinery & Equipment. Machinery and equipment is commonly defined as a fixed asset classification which typically includes tangible property (other than land, buildings, and improvements other than buildings) with a life of more than one year. Such assets typically include office equipment, furniture, machine tools, and motor vehicles. Equipment may be attached to a structure for purposes of securing the item, but unless it is permanently attached to an integral part of the building or structure, it will generally be classified as equipment and not buildings. Equipment is generally defined as tangible property other than land, buildings, or improvements other than buildings, which is used in operations. Examples include machinery, tools, trucks, cars, furniture, and furnishings.

•

Prepaid Expenses. Prepaid expenses are typically defined as those supplies and/or services (not inventory) acquired or purchased but not consumed or used at the end of the accounting period.

•

Progress Payments. Progress payments are commonly defined as periodic payments to a supplier, contractor, or subcontractor for work as it is completed as desired, in order to reduce working capital requirements.

•

Property Plant and Equipment - Gross. Gross property, plant and equipment generally consists of the gross book value (rather than the more commonly-used measures of fixed capital stocks in current or real value), of all commercial buildings, associated land and equipment used therein that are owned by the company and that are either used or operated by the company or leased or rented to others.

•

Property Plant and Equipment - Net. Net PP&E equals the original cost of property, plant, and equipment (PP&E), less accumulated depreciation, depletion and amortization (DD&A).

•

Raw Materials. Raw materials are materials which will be converted by a manufacturer into a finished product.




14

•

Receivables (Net). Net receivables are defined as the net amount due to the company from private persons, businesses, agencies, funds, or governmental units which is expected to be collected in the form of moneys, goods, and/or services.

•

Short Term Investments. Short-term investments are investments which can be typically liquidated in less than one year.

•

Tangible Other Assets. Other tangible assets are commonly understood to be something substantial or real that is capable of being given an actual or approximate value (market or estimated), not classified elsewhere.

•

Total Assets. Total assets are defined as the financial representation of economic resources, the beneficial interest in which is legally or equitably secured to a particular organization as a result of a past transaction or event.

•

Total Inventories. Total inventories are defined as the total amount of goods on hand.

•

Transportation Equipment. Transportation equipment is equipment used for the transportation of goods for sale.

•

Work in Process. Work in progress includes goods which have been started but are not yet ready for sale.




3.2.3

15

Asset Structure: Outlook

Using the methodology described in the introduction, the following table summarizes asset structure benchmarks for firms involved in electric services in Estonia. To allow comparable benchmarking, a common index of Total Assets = 100 is used. All figures are current-year projections for companies operating in Estonia based on latest financial results available. Asset Structure Estonia Europe World Avg. _________________________________________________________________________________________________________

Cash & Short Term Investments Cash Short Term Investments Receivables (Net) Total Inventories Raw Materials Work in Process Finished Goods Progress Payments & Other Prepaid Expenses Other Current Assets Current Assets - Total Long Term Receivables Investments in Unconsolidated Subsidiaries Other Investments Property Plant and Equipment - Net Property Plant and Equipment - Gross Land Buildings Machinery & Equipment Transportation Equipment Other Property Plant & Equipment Accumulated Depreciation - Total Accumulated Depreciation - Buildings Accumulated Depreciation -Machinery & Equipment Accumulated Depreciation - Transportation Equipment Accumulated Depreciation - Other Prop & Equip Other Assets Deferred Charges Tangible Other Assets Intangible Other Assets Total Assets

7.15 4.55 1.58 18.03 7.23 0.66 0.15 5.39 2.96 0.11 0.76 33.27 2.78 2.30 3.48 52.52 75.04 9.85 3.88 15.15 0.23 51.08 22.52 0.52 8.08 0.14 16.33 3.03 0.02 0.54 0.52 100.00

7.54 4.96 2.32 12.90 3.28 1.76 1.83 0.44 0.29 0.63 2.00 25.90 1.34 5.46 2.41 57.12 107.68 3.16 26.80 57.24 7.48 23.74 50.35 12.75 33.72 5.24 11.96 6.46 0.45 0.32 4.46 100.00

8.61 4.67 3.34 13.59 2.41 0.81 0.22 0.47 1.49 0.90 2.09 27.24 0.33 3.14 4.71 54.17 88.01 4.81 13.03 49.92 1.86 22.10 33.17 3.81 21.61 1.13 6.89 5.48 0.79 0.70 1.74 100.00

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2006




3.2.4

16

Large Variances: Assets

The following graphics summarize for electric services the large asset structure gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Total Inventories 8

7.23

6

4.82 3.28

4

2.41

2 0 Estonia

Europe

World Average

Gap

Gap: Finished Goods 6

5.39

4.92

5 4 3 2 0.44

1

0.47

0 Estonia

Europe

World Average

Gap

Gap: Current Assets - Total 40

33.27

30

25.9

27.24

20 6.03

10 0 Estonia


Europe

World Average

Gap



17

Gap: Property Plant and Equipment - Gross 150 100

107.68

88.01

75.04

50 0

-12.97

-50 Estonia

Europe

World Average

Gap

Gap: Land 10

9.85

8 6

4.81

5.04

3.16

4 2 0 Estonia

Europe

World Average

Gap

Gap: Buildings 26.8

30 20 10

13.03 3.88

0 -10 Estonia

Europe

World Average

-9.15 Gap

Gap: Machinery & Equipment 57.24

60

49.92

40 20

15.15

0 -20 -34.77

-40 Estonia


Europe

World Average

Gap



18

Gap: Other Property Plant & Equipment 60

51.08

50 40 23.74

30

28.98

22.1

20 10 0 Estonia

Europe

World Average

Gap

Gap: Accumulated Depreciation - Total 60 40

50.35 33.17 22.52

20 0 -10.65

-20 Estonia

Europe

World Average

Gap

Gap: Accumulated Depreciation -Machinery & Equipment 40

33.72

30 20 10

21.61 8.08

0 -10

-13.53

-20 Estonia

Europe

World Average

Gap

Gap: Accumulated Depreciation - Other Prop & Equip 20

16.33

15

11.96 9.44

10

6.89

5 0 Estonia


Europe

World Average

Gap



3.2.5

19

Key Percentiles and Rankings

We now consider the distribution of asset ratios for electric services using ranks and percentiles. What percent of countries have a value lower or higher than Estonia (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of asset structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical asset ratios are highlighted in additional tables. Asset Structure

Estonia

Rank of Total

Percentile

7.15 4.55 1.58 18.03 7.23 0.66 0.15 5.39 2.96 0.11 0.76 33.27 2.78 2.30 3.48 52.52 75.04 9.85 3.88 15.15 0.23 51.08 22.52 0.52 8.08 0.14 16.33 3.03 0.02 0.54 0.52 100.00

28 of 54 17 of 51 31 of 49 12 of 54 7 of 54 33 of 47 20 of 34 2 of 35 3 of 44 34 of 35 32 of 53 14 of 54 5 of 43 32 of 47 8 of 47 36 of 54 38 of 52 6 of 40 40 of 49 46 of 51 31 of 36 8 of 52 32 of 52 43 of 46 37 of 47 27 of 33 10 of 49 36 of 54 34 of 34 20 of 36 39 of 52

48.15 66.67 36.73 77.78 87.04 29.79 41.18 94.29 93.18 2.86 39.62 74.07 88.37 31.91 82.98 33.33 26.92 85.00 18.37 9.80 13.89 84.62 38.46 6.52 21.28 18.18 79.59 33.33 0.00 44.44 25.00

_________________________________________________________________________________________________________


_________________________________________________________________________________________________________





20

Cash & Short Term Investments Countries

Value (total assets = 100)

Rank

Percentile

27.84 27.77 18.10 17.02 16.12 15.90 14.07 12.20 11.77 11.02 9.94 9.24 9.16 8.11 7.89 7.89 7.86 7.81 7.71 7.54 7.42 7.34 6.48 6.15 6.12 5.55 5.34 5.28 5.27 5.08 5.03 4.89 4.78 4.55 3.76 3.36 3.05 2.86 2.76 2.27 2.13 1.84 1.65 1.53 1.22

1 2 4 5 6 7 9 11 12 13 14 15 16 18 19 20 21 22 23 24 25 27 29 30 31 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 51 52 53

98.11 96.23 92.45 90.57 88.68 86.79 83.02 79.25 77.36 75.47 73.58 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 45.28 43.40 41.51 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Thailand Singapore China Malaysia Switzerland Pakistan Germany Belgium Philippines Luxembourg France South Africa New Zealand Czech Republic Indonesia Hong Kong Norway Poland South Korea the United Kingdom Denmark Netherlands Greece Austria Argentina Italy Spain Israel Ireland India Canada Brazil Japan Finland Australia Sweden USA Peru Taiwan Russian Federation Hungary Chile Portugal

the Middle East Latin America Asia Asia Asia Asia Europe the Middle East Europe Europe Asia Europe Europe Africa Oceana Europe Asia Asia Europe Europe Asia Europe Europe Europe Europe Europe Latin America Europe Europe the Middle East Europe Asia North America Latin America Asia Europe Oceana Europe North America Latin America Asia Europe Europe Latin America Europe

_________________________________________________________________________________________________________





21

Cash & Short Term Investments (Electric Services) Countries in Europe


Rank

Percentile

26.45 24.28 23.59 22.76 16.51 14.07 13.13 11.77 11.02 9.24 9.16 8.17 7.89 7.71 7.54 7.49 7.49 7.49 7.34 7.15 7.07 7.05 6.78 6.52 6.51 6.48 6.15 6.12 5.67 5.59 5.55 5.50 5.36 5.36 5.32 5.28 5.27 5.03 4.95 3.36 2.86 2.78 1.98 1.84 1.84 1.65 1.48 1.41 1.39 1.22 1.17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Monaco Switzerland Liechtenstein Germany Belgium Luxembourg France Andorra Czech Republic Norway Poland Latvia Faroe Islands Croatia the United Kingdom Estonia Belarus Slovakia Moldova Kazakhstan Bulgaria Denmark Netherlands Greece Malta Isle of Man Austria San Marino Jersey Guernsey Vatican City Italy Spain Ireland Slovenia Finland Sweden Iceland Albania Russian Federation Lithuania Hungary Ukraine Gibraltar Georgia Portugal Cyprus

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2006 www.icongrouponline.com



22

Receivables (Net) Countries


Rank

Percentile

37.93 26.09 25.37 25.16 23.38 22.27 20.63 19.47 18.79 18.74 18.71 16.91 16.71 15.67 15.54 14.39 14.19 13.99 13.84 13.82 13.37 12.96 12.86 12.57 12.39 11.62 11.43 11.03 10.40 10.15 9.76 8.67 8.40 8.31 8.16 8.05 7.21 7.06 6.91 6.75 6.75 6.18 4.98 4.61 3.94

1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 19 20 21 22 23 24 25 27 28 29 30 31 32 33 34 36 37 38 39 40 41 42 43 44 45 46 49 50 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 75.47 73.58 71.70 69.81 67.92 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 5.66 3.77

Region

_________________________________________________________________________________________________________

Singapore Netherlands Israel Ireland India Russian Federation France Italy Turkey Mexico South Korea Philippines Switzerland Pakistan Germany Finland South Africa Spain Denmark Hungary Indonesia Poland Norway Chile Belgium the United Kingdom Greece New Zealand Brazil Malaysia Luxembourg Japan Canada Argentina Portugal USA Peru Australia Hong Kong China Sweden Czech Republic Austria Thailand Taiwan

Asia Europe the Middle East Europe Asia Europe Europe Europe the Middle East Latin America Asia Asia Europe the Middle East Europe Europe Africa Europe Europe Europe Asia Europe Europe Latin America Europe Europe Europe Oceana Latin America Asia Europe Asia North America Latin America Europe North America Latin America Oceana Asia Asia Europe Europe Europe Asia Asia

_________________________________________________________________________________________________________





23

Receivables (Net) (Electric Services) Countries in Europe


Rank

Percentile

36.78 26.09 25.16 22.27 22.22 20.63 19.62 19.47 18.03 17.85 16.71 16.38 15.92 15.60 15.54 15.36 14.39 13.99 13.84 13.82 13.13 12.96 12.86 12.43 12.39 11.82 11.65 11.64 11.62 11.43 11.42 11.22 11.20 10.59 10.45 9.76 8.16 8.13 7.81 6.75 6.63 6.29 6.18 5.87 5.86 5.16 5.15 4.98 4.93 4.81 4.81

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Monaco Netherlands Ireland Russian Federation Lithuania France Vatican City Italy Estonia Romania Switzerland Bosnia & Herzegovina Macedonia Liechtenstein Germany Serbia & Montenegro Finland Spain Denmark Hungary Slovenia Poland Norway Ukraine Belgium Gibraltar Moldova Georgia the United Kingdom Greece Andorra Kazakhstan Bulgaria Malta Isle of Man Luxembourg Portugal Iceland Cyprus Sweden Faroe Islands Albania Czech Republic Latvia Croatia Belarus Slovakia Austria San Marino Jersey Guernsey

_________________________________________________________________________________________________________




24

Total Inventories Countries


Rank

Percentile

25.19 24.98 11.91 7.60 7.53 7.50 4.76 4.71 4.33 4.15 4.00 3.97 3.88 3.75 3.72 3.60 3.15 3.12 2.90 2.61 2.53 2.49 2.47 2.45 2.23 2.14 2.06 1.83 1.75 1.62 1.57 1.48 1.47 1.41 1.22 1.00 0.99 0.99 0.88 0.88 0.87 0.57 0.35 0.12 0.07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20 22 23 24 25 26 28 29 31 33 35 36 37 38 39 40 41 42 43 44 45 46 47 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 62.26 58.49 56.60 54.72 52.83 50.94 47.17 45.28 41.51 37.74 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Israel Ireland Singapore Greece Norway South Korea Belgium Russian Federation Denmark Poland Japan Canada Finland Italy France Pakistan Philippines Sweden India Germany Thailand Indonesia Australia USA Spain Taiwan South Africa China the United Kingdom Luxembourg Switzerland Hong Kong Hungary Malaysia Czech Republic Peru Austria Netherlands Turkey Mexico Portugal Chile Brazil Argentina New Zealand

the Middle East Europe Asia Europe Europe Asia Europe Europe Europe Europe Asia North America Europe Europe Europe the Middle East Asia Europe Asia Europe Asia Asia Oceana North America Europe Asia Africa Asia Europe Europe Europe Asia Europe Asia Europe Latin America Europe Europe the Middle East Latin America Europe Latin America Latin America Latin America Oceana

_________________________________________________________________________________________________________





25

Total Inventories (Electric Services) Countries in Europe


Rank

Percentile

24.98 11.55 7.60 7.53 7.23 7.04 6.95 4.76 4.71 4.70 4.33 4.15 3.88 3.78 3.75 3.73 3.72 3.59 3.58 3.12 2.99 2.98 2.61 2.48 2.23 2.10 1.75 1.62 1.57 1.47 1.47 1.42 1.32 1.26 1.24 1.22 1.16 1.16 0.99 0.99 0.98 0.96 0.96 0.88 0.87 0.84 0.84 0.77 0.75 0.72 0.07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Monaco Greece Norway Estonia Malta Isle of Man Belgium Russian Federation Lithuania Denmark Poland Finland Vatican City Italy Moldova France Kazakhstan Bulgaria Sweden Belarus Slovakia Germany Iceland Spain Slovenia the United Kingdom Luxembourg Switzerland Hungary Liechtenstein Faroe Islands Ukraine Gibraltar Georgia Czech Republic Latvia Croatia Austria Netherlands San Marino Jersey Guernsey Albania Portugal Romania Cyprus Bosnia & Herzegovina Macedonia Serbia & Montenegro Andorra

_________________________________________________________________________________________________________




26

Current Assets - Total Countries


Rank

Percentile

68.43 56.90 56.43 53.87 53.72 37.58 36.08 34.89 34.52 34.17 33.80 33.30 32.71 29.72 29.71 29.32 29.24 28.93 27.84 27.29 26.73 26.05 25.96 25.34 25.23 25.08 24.95 23.66 21.31 20.63 20.34 20.03 19.26 18.58 17.71 15.99 15.70 15.61 14.17 14.06 14.02 12.21 12.03 10.89 9.01

1 2 3 4 5 7 8 9 10 11 12 13 14 16 17 18 19 20 22 23 24 25 26 27 28 29 30 31 34 35 36 38 39 40 41 42 43 44 46 47 48 49 50 51 52

98.11 96.23 94.34 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 69.81 67.92 66.04 64.15 62.26 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 13.21 11.32 9.43 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Singapore Israel Ireland Turkey Mexico Philippines India France South Korea Germany Netherlands Switzerland Pakistan Italy Indonesia Norway Russian Federation Belgium Malaysia Greece Finland Czech Republic Thailand Denmark Poland China South Africa the United Kingdom Spain Luxembourg Hong Kong New Zealand Hungary Canada Japan USA Chile Brazil Argentina Australia Sweden Portugal Austria Peru Taiwan

Asia the Middle East Europe the Middle East Latin America Asia Asia Europe Asia Europe Europe Europe the Middle East Europe Asia Europe Europe Europe Asia Europe Europe Europe Asia Europe Europe Asia Africa Europe Europe Europe Asia Oceana Europe North America Asia North America Latin America Latin America Latin America Oceana Europe Europe Europe Latin America Asia

_________________________________________________________________________________________________________





27

Current Assets - Total (Electric Services) Countries in Europe


Rank

Percentile

66.35 56.43 51.19 46.97 45.65 44.04 34.89 34.17 33.80 33.30 33.27 31.08 29.96 29.72 29.32 29.24 29.17 28.93 27.29 26.73 26.05 25.34 25.30 25.23 24.96 24.72 24.71 23.66 22.68 21.83 21.79 21.31 20.74 20.63 20.00 19.51 19.26 17.32 16.47 16.22 16.15 15.55 15.51 14.02 12.21 12.03 11.91 11.68 11.61 11.61 9.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Monaco Ireland Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro France Germany Netherlands Switzerland Estonia Liechtenstein Vatican City Italy Norway Russian Federation Lithuania Belgium Greece Finland Czech Republic Denmark Malta Poland Isle of Man Latvia Croatia the United Kingdom Moldova Kazakhstan Bulgaria Spain Andorra Luxembourg Slovenia Faroe Islands Hungary Ukraine Gibraltar Georgia Iceland Belarus Slovakia Sweden Portugal Austria San Marino Cyprus Guernsey Jersey Albania

_________________________________________________________________________________________________________




28

Property Plant and Equipment - Net Countries


Rank

Percentile

85.41 85.36 76.44 74.23 73.08 71.80 71.58 71.26 70.27 68.31 68.30 67.61 65.98 65.90 65.50 65.15 64.72 64.57 64.49 64.17 63.74 63.57 63.35 62.66 62.56 59.07 57.94 57.79 56.93 54.48 53.52 53.40 52.39 46.86 42.63 42.06 40.81 40.60 38.26 38.16 37.74 29.84 28.43 9.38 9.30

1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 28 29 30 31 33 34 35 36 38 39 40 41 42 43 44 45 48 49 52 53

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 50.94 49.06 47.17 45.28 43.40 41.51 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 9.43 7.55 1.89 0.00

Region

_________________________________________________________________________________________________________

Argentina Peru Hungary Japan Brazil Greece Poland Luxembourg Canada Chile Russian Federation Sweden Australia Czech Republic Thailand the United Kingdom USA Pakistan South Africa Spain Portugal Taiwan Denmark Malaysia China Austria Hong Kong Netherlands Norway South Korea India Italy New Zealand France Germany Finland Belgium Switzerland Turkey Mexico Philippines Indonesia Singapore Israel Ireland

Latin America Latin America Europe Asia Latin America Europe Europe Europe North America Latin America Europe Europe Oceana Europe Asia Europe North America the Middle East Africa Europe Europe Asia Europe Asia Asia Europe Asia Europe Europe Asia Asia Europe Oceana Europe Europe Europe Europe Europe the Middle East Latin America Asia Asia Asia the Middle East Europe

_________________________________________________________________________________________________________





29

Property Plant and Equipment - Net (Electric Services) Countries in Europe


Rank

Percentile

76.82 76.64 76.44 74.51 71.80 71.58 71.26 68.74 68.30 68.14 67.61 66.55 65.90 65.67 65.39 65.36 65.15 64.36 64.35 64.17 63.74 63.35 62.55 62.52 61.93 61.82 61.01 60.24 59.07 58.51 57.79 57.04 57.04 56.93 55.55 54.25 53.83 53.40 52.52 46.86 42.63 42.06 40.81 40.60 37.89 36.35 33.36 32.42 31.27 27.57 9.30

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belarus Slovakia Hungary Albania Greece Poland Luxembourg Ukraine Russian Federation Lithuania Sweden Malta Czech Republic Isle of Man Iceland Gibraltar the United Kingdom Moldova Georgia Spain Portugal Denmark Latvia Croatia Kazakhstan Bulgaria Cyprus Slovenia Austria San Marino Netherlands Guernsey Jersey Norway Faroe Islands Andorra Vatican City Italy Estonia France Germany Finland Belgium Switzerland Liechtenstein Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Monaco Ireland

_________________________________________________________________________________________________________




30

Accumulated Depreciation - Total Countries


Rank

Percentile

148.74 136.33 106.39 104.32 90.67 83.55 77.85 77.48 58.84 56.75 48.28 46.55 45.15 44.26 43.50 40.46 39.52 37.04 35.89 35.05 34.89 34.82 32.78 31.28 31.28 30.61 27.56 26.69 24.94 23.36 22.45 18.87 14.81 14.46 14.37 14.33 11.67 11.58 11.32 10.72 8.95 4.36 2.41

1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 41 42 43 45 47 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 19.61 17.65 15.69 11.76 7.84 1.96 0.00

Region

_________________________________________________________________________________________________________

Portugal Luxembourg Germany Japan Netherlands Austria Russian Federation Poland Denmark Hungary Spain Finland Switzerland Belgium Brazil Sweden India USA Czech Republic Pakistan Norway France the United Kingdom Chile Canada China Taiwan Singapore Italy South Korea Hong Kong Peru Malaysia Thailand Turkey Mexico Israel Ireland Philippines Australia Indonesia Greece New Zealand

Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Latin America Europe Asia North America Europe the Middle East Europe Europe Europe Latin America North America Asia Asia Asia Europe Asia Asia Latin America Asia Asia the Middle East Latin America the Middle East Europe Asia Oceana Asia Europe Oceana

_________________________________________________________________________________________________________





31

Accumulated Depreciation - Total (Electric Services) Countries in Europe


Rank

Percentile

148.74 142.38 136.33 106.39 90.67 83.55 82.75 80.68 80.68 77.85 77.67 77.48 73.59 73.42 69.66 67.03 66.91 58.84 56.75 51.03 48.52 48.28 47.77 46.55 45.33 45.15 44.26 42.13 40.46 37.42 35.89 34.89 34.82 34.06 34.05 32.78 25.88 25.14 24.94 22.52 21.52 16.47 13.65 12.53 12.17 11.74 11.58 4.36 4.04 3.98 2.49

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Portugal Cyprus Luxembourg Germany Netherlands Austria San Marino Guernsey Jersey Russian Federation Lithuania Poland Belarus Slovakia Moldova Kazakhstan Bulgaria Denmark Hungary Ukraine Gibraltar Spain Georgia Finland Slovenia Switzerland Belgium Liechtenstein Sweden Iceland Czech Republic Norway France Latvia Croatia the United Kingdom Monaco Vatican City Italy Estonia Faroe Islands Albania Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Ireland Greece Malta Isle of Man Andorra

_________________________________________________________________________________________________________




32

Intangible Other Assets Countries


Rank

Percentile

34.53 34.24 27.53 13.23 12.58 11.62 10.24 9.69 8.30 8.24 6.60 6.40 5.75 5.75 5.63 5.23 4.38 4.13 3.96 3.91 3.06 1.84 1.65 1.51 1.33 1.20 1.07 0.92 0.89 0.89 0.78 0.65 0.54 0.47 0.41 0.34 0.32 0.16 0.16 0.09 0.06 0.02 0.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 21 23 25 26 28 30 31 32 33 34 35 36 37 38 39 40 42 43 45 46 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 64.71 62.75 60.78 58.82 54.90 50.98 49.02 45.10 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 17.65 15.69 11.76 9.80 5.88 3.92 1.96 0.00

Region

_________________________________________________________________________________________________________

Israel Ireland New Zealand Finland Australia France Portugal Italy Austria USA Chile the United Kingdom Norway Hong Kong Switzerland Philippines Malaysia Indonesia Spain Belgium Germany Thailand Netherlands Canada Luxembourg Poland Singapore Czech Republic Sweden China Japan South Africa South Korea Peru Brazil Hungary Greece Turkey Mexico Denmark Russian Federation Pakistan Argentina

the Middle East Europe Oceana Europe Oceana Europe Europe Europe Europe North America Latin America Europe Europe Asia Europe Asia Asia Asia Europe Europe Europe Asia Europe North America Europe Europe Asia Europe Europe Asia Asia Africa Asia Latin America Latin America Europe Europe the Middle East Latin America Europe Europe the Middle East Latin America

_________________________________________________________________________________________________________





33

Intangible Other Assets (Electric Services) Countries in Europe


Rank

Percentile

34.24 28.50 13.23 11.62 10.24 9.80 9.77 9.69 8.32 8.30 8.22 8.02 8.02 6.40 5.75 5.63 5.51 5.26 3.96 3.91 3.71 3.06 1.65 1.33 1.20 1.08 1.04 1.04 1.03 0.92 0.89 0.87 0.87 0.52 0.41 0.34 0.32 0.30 0.30 0.30 0.29 0.28 0.22 0.22 0.16 0.14 0.14 0.13 0.09 0.06 0.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Andorra Finland France Portugal Cyprus Vatican City Italy Iceland Austria San Marino Guernsey Jersey the United Kingdom Norway Switzerland Faroe Islands Liechtenstein Spain Belgium Slovenia Germany Netherlands Luxembourg Poland Moldova Kazakhstan Bulgaria Monaco Czech Republic Sweden Latvia Croatia Estonia Albania Hungary Greece Ukraine Malta Isle of Man Gibraltar Georgia Belarus Slovakia Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Denmark Russian Federation Lithuania

_________________________________________________________________________________________________________




3.3 3.3.1


IN

34

ESTONIA: LIABILITY STRUCTURE

Overview

In this chapter we consider the liability structure of firms operating in Estonia benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of liabilities and shareholder equity is then presented for the proto-typical firm operating in Estonia and the average global benchmarks (sometimes referred to as a financial “gap” analysis). The figure reflect firms involved in electric services in Estonia. For ratios where there are large deviations between Estonia and the benchmarks, graphics are provided (total liabilities and equity = 100 percent). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis liability ratios are highlighted.

3.3.2

Liabilities and Equity – Definitions of Terms

The following definitions are provided for those less familiar with the liability-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of liabilities and equity, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accounts Payable. Accounts payable are defined as amounts owed on open account to private persons or organizations for goods or services received.

•

Capital Surplus. Capital surplus is commonly defined as an amount of equity which is directly contributed capital in excess of the par value.

•

Capitalized Lease Obligations. A capitalized lease obligation is commonly defined as an ownership arrangement in which the item under lease is typically a long-term asset. Capital leases are generally recorded as assets with liability at the current value of the lease payment.

•

Common Equity. Common equity is defined to equal the company's net worth. It typically comprises capital stock, capital surplus, retained earnings, and, in some cases, net worth reserves. Common equity is the portion of total net worth belonging to the common stockholders. Synonyms which are often used for common equity are “common stock” and “net worth”.

•

Common Stock. Common stock is defined as the securities which represent the company's ownership interest. Common stockholders typically assume greater risk than preferred stockholders; although common stockholders maintain greater control and generally greater dividends and capital appreciation. Common stock can be used interchangeably with the term capital stock when the company has no preferred stock.

•

Current Liabilities - Total. Total current liabilities are defined as the total amount of obligations which would require the use of current assets or other current liabilities to pay.

•

Current Portion of Long Term Debt. The current proportion of long term debt is typically defined as debt which is payable in more than one year.

•

Deferred Taxes. Deferred taxes are compulsory charges from a previous accounting period which are yet unpaid.




35

•

Deferred Taxes - Credit. Deferred tax credits are defined as credits against compulsory charges from a previous accounting period which are yet unpaid.

•

Dividends Payable. Dividends payable typically include the declared dividend dollar amount that a company is obligated to pay. The dividend payment eliminates dividends payable and reduces cash.

•

Income Taxes Payable. Income taxes payable are understood to mean taxes which are levied by state, federal, and local governments on the company's reported accounting profit. Income taxes payable are those which are due in the current accounting period.

•

Long Term Debt. Long-term debt is defined to be due in a period exceeding one year or one operating cycle, whichever is longer. Long-term debt can have an extended repayment period such as a many-year mortgage on land and buildings, or debt that's intended to be permanent such as bonds issued to investors.

•

Long Term Debt Excluding Capitalized Leases. Long term debt excluding capitalized leases is defined as debt which is typically due in a period exceeding one year or one operating cycle, whichever is longer, less capitalized leases (see Long Term Debt for exceptions). Capital leases are generally recorded as assets with liability at the current value of the lease payment.

•

Minority Interest. Minority interest is the proportional share of the minority ownership's interest (less than 50 percent) in the earnings or losses.

•

Retained Earnings. proprietary funds.

•

Shareholders Equity. Shareholders equity is commonly defined to be the amount of total equity reserved for common and preferred shareholders.

•

Short Term Debt. Short term debt is generally defined as debt payable within one year.

•

Total Liabilities. Total liabilities are generally defined to include all the claims against a corporation. Liabilities include accounts and wages and salaries payable, dividends declared payable, accrued taxes payable, fixed or long-term liabilities such as mortgage bonds, debentures, and bank loans.


Retained earnings is an equity account reflecting the accumulated earnings of



3.3.3

36

Liability Structure: Outlook

Using the methodology described in the introduction, the following table summarizes liability and equity structure benchmarks for firms involved in electric services in Estonia. To allow comparable benchmarking, a common index of Total Liabilities & Shareholders Equity = 100 is used. All figures are current-year projections for companies operating in Estonia based on latest financial results available. Liability Structure Estonia Europe World Avg. _________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Income Taxes Payable Dividends Payable Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Capitalized Lease Obligations Provision For Risks and Charges Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Other Liabilities Total Liabilities Minority Interest Common Equity Common Stock Capital Surplus Revaluation Reserves Other Appropriated Reserves Unappropriated Reserves Retained Earnings Unrealized Foreign Exchange Gain/Loss Unrealized Gain/Loss on Marketable Securities Treasury Stock Total Liabilities & Shareholders Equity

18.67 11.88 1.25 1.12 3.83 36.43 15.03 15.03 0.00 1.33 -0.16 1.40 1.48 0.56 52.94 0.39 43.07 7.40 9.40 11.00 2.54 9.59 9.00 -0.03 -0.21 1.23 100.00

7.95 5.36 1.60 1.01 8.54 23.15 15.08 14.52 0.57 5.98 1.38 2.67 1.39 3.34 47.57 1.20 43.99 14.81 8.45 3.54 7.62 4.44 11.50 -0.31 -0.01 0.10 100.00

6.65 4.71 1.98 1.20 6.75 19.54 15.79 15.67 0.12 1.45 2.40 1.13 0.46 4.13 43.14 2.20 46.30 15.01 9.48 0.88 6.76 5.03 17.55 -0.01 0.02 0.09 100.00

_________________________________________________________________________________________________________





3.3.4

37

Large Variances: Liabilities

The following graphics summarize for electric services the large liability structure gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Accounts Payable 20

18.67

15

12.02 7.95

10

6.65

5 0 Estonia

Europe

World Average

Gap

Gap: Short Term Debt & Current Portion of Long Term Debt 12

11.88

10 7.17

8

5.36

6

4.71

4 2 0 Estonia

Europe

World Average

Gap

Gap: Current Liabilities - Total 40

36.43

30

23.15

20

19.54

16.89

10 0 Estonia


Europe

World Average

Gap



38

Gap: Other Liabilities 6 3.34

4 2

4.13

0.56

0 -2 -3.57

-4 Estonia

Europe

World Average

Gap

Gap: Total Liabilities 60

52.94

50

47.57

43.14

40 30 20

9.8

10 0 Estonia

Europe

World Average

Gap

Gap: Common Equity 50

43.07

43.99

46.3

40 30 20 10 0

-3.23

-10 Estonia

Europe

World Average

Gap

Gap: Common Stock 20

14.81

15

15.01

7.4

10 5 0 -5

-7.61

-10 Estonia


Europe

World Average

Gap



39

Gap: Revaluation Reserves 11

12

10.12

10 8 6

3.54

4

0.88

2 0 Estonia

Europe

World Average

Gap

Gap: Other Appropriated Reserves 8 6 4 2 0 -2 -4 -6

7.62

6.76

2.54

-4.22 Estonia

Europe

World Average

Gap

Gap: Unappropriated Reserves 10

9.59

8 6

4.44

5.03

4.56

4 2 0 Estonia

Europe

World Average

Gap

Gap: Retained Earnings 17.55

20 15

9

10

11.5

5 0 -5

-8.55

-10 Estonia


Europe

World Average

Gap



3.3.5

40


We now consider the distribution of liability ratios for electric services using ranks and percentiles. What percent of countries have a value lower or higher than Estonia (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of liability structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical liability ratios are highlighted in additional tables. Liability Structure

Estonia

Rank of Total

Percentile

18.67 11.88 1.25 1.12 3.83 36.43 15.03 15.03 0.00 1.33 -0.16 1.40 1.48 0.56 52.94 0.39 43.07 7.40 9.40 11.00 2.54 9.59 9.00 -0.03 -0.21 1.23 100.00

4 of 52 5 of 54 14 of 49 11 of 28 42 of 54 3 of 54 37 of 53 36 of 53 23 of 23 24 of 39 28 of 41 16 of 23 12 of 24 39 of 52 25 of 54 34 of 40 24 of 54 36 of 52 15 of 43 5 of 21 25 of 48 9 of 30 34 of 52 15 of 27 9 of 10 3 of 18

92.31 90.74 71.43 60.71 22.22 94.44 30.19 32.08 0.00 38.46 31.71 30.43 50.00 25.00 53.70 15.00 55.56 30.77 65.12 76.19 47.92 70.00 34.62 44.44 10.00 83.33

_________________________________________________________________________________________________________


_________________________________________________________________________________________________________





41

Accounts Payable Countries

Value (total liabilities & equity = 100)

Rank

Percentile

21.59 21.43 19.36 15.33 14.63 14.54 14.42 14.01 13.98 11.98 11.59 9.44 9.37 9.07 8.99 8.73 8.19 7.60 7.57 6.58 6.09 5.81 5.57 5.04 5.02 4.68 4.48 4.36 3.93 3.65 3.64 3.64 3.45 3.02 2.94 2.90 2.64 2.55 2.32 2.16 2.00 1.78 1.59

1 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 32 33 34 36 38 39 40 42 43 45 46 47 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 37.25 35.29 33.33 29.41 25.49 23.53 21.57 17.65 15.69 11.76 9.80 7.84 1.96 0.00

Region

_________________________________________________________________________________________________________

Singapore Netherlands South Korea Luxembourg Czech Republic Israel Ireland Turkey Mexico Russian Federation India New Zealand Italy Poland Belgium Canada France Spain Switzerland Pakistan Hungary the United Kingdom USA Denmark Norway Germany Portugal Philippines Brazil Peru Chile Hong Kong Indonesia Japan Austria China Sweden Australia Thailand Finland Taiwan Malaysia Greece

Asia Europe Asia Europe Europe the Middle East Europe the Middle East Latin America Europe Asia Oceana Europe Europe Europe North America Europe Europe Europe the Middle East Europe Europe North America Europe Europe Europe Europe Asia Latin America Latin America Latin America Asia Asia Asia Europe Asia Europe Oceana Asia Europe Asia Asia Europe

_________________________________________________________________________________________________________





42

Accounts Payable (Electric Services) Countries in Europe


Rank

Percentile

21.43 20.94 18.67 15.33 14.63 14.42 13.89 13.88 13.31 12.22 11.98 11.96 11.87 11.45 9.77 9.45 9.37 9.07 8.99 8.19 8.15 7.85 7.83 7.60 7.57 7.14 7.07 6.09 5.81 5.63 5.48 5.21 5.13 5.04 5.02 4.68 4.48 4.29 3.49 3.47 3.46 3.19 2.94 2.91 2.84 2.84 2.64 2.16 1.59 1.48 1.46

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Netherlands Monaco Estonia Luxembourg Czech Republic Ireland Latvia Croatia Romania Bosnia & Herzegovina Russian Federation Lithuania Macedonia Serbia & Montenegro Andorra Vatican City Italy Poland Belgium France Moldova Kazakhstan Bulgaria Spain Switzerland Slovenia Liechtenstein Hungary the United Kingdom Iceland Ukraine Gibraltar Georgia Denmark Norway Germany Portugal Cyprus Faroe Islands Belarus Slovakia Albania Austria San Marino Guernsey Jersey Sweden Finland Greece Malta Isle of Man

_________________________________________________________________________________________________________




43

Current Liabilities - Total Countries


Rank

Percentile

43.35 37.78 34.09 32.31 32.30 31.60 31.51 31.08 30.85 30.82 30.29 27.70 27.66 25.04 24.81 24.58 24.36 23.13 21.59 21.59 21.49 21.01 20.92 20.11 19.47 19.04 19.00 18.36 17.97 17.89 17.86 17.85 17.53 17.53 17.30 14.93 14.67 13.66 13.01 12.72 12.36 12.35 11.80 8.64 8.61

1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 44 45 46 49 50

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 7.55 5.66

Region

_________________________________________________________________________________________________________

Netherlands South Korea Singapore Italy Hungary Turkey Mexico Israel Denmark Ireland Czech Republic France Japan the United Kingdom Spain Pakistan Norway India Luxembourg South Africa Austria Belgium Russian Federation Finland Portugal Germany China Chile USA Canada Switzerland Poland Greece Argentina New Zealand Philippines Australia Hong Kong Peru Brazil Sweden Malaysia Indonesia Taiwan Thailand

Europe Asia Asia Europe Europe the Middle East Latin America the Middle East Europe Europe Europe Europe Asia Europe Europe the Middle East Europe Asia Europe Africa Europe Europe Europe Europe Europe Europe Asia Latin America North America North America Europe Europe Europe Latin America Oceana Asia Oceana Asia Latin America Latin America Europe Asia Asia Asia Asia

_________________________________________________________________________________________________________





44

Current Liabilities - Total (Electric Services) Countries in Europe


Rank

Percentile

43.35 36.43 33.06 32.57 32.31 32.30 30.85 30.82 30.29 30.02 29.05 28.75 28.74 27.70 27.62 27.55 27.19 26.78 25.83 25.04 24.81 24.36 23.29 21.59 21.49 21.29 21.01 20.92 20.88 20.75 20.75 20.11 19.47 19.04 18.64 18.16 17.92 17.86 17.85 17.53 16.99 16.95 16.67 16.25 16.05 16.04 15.44 15.42 13.10 12.36 11.35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Netherlands Estonia Monaco Vatican City Italy Hungary Denmark Ireland Czech Republic Romania Ukraine Latvia Croatia France Gibraltar Bosnia & Herzegovina Georgia Macedonia Serbia & Montenegro the United Kingdom Spain Norway Slovenia Luxembourg Austria San Marino Belgium Russian Federation Lithuania Guernsey Jersey Finland Portugal Germany Cyprus Iceland Andorra Switzerland Poland Greece Belarus Slovakia Liechtenstein Malta Moldova Isle of Man Kazakhstan Bulgaria Faroe Islands Sweden Albania

_________________________________________________________________________________________________________




45

Long Term Debt Countries


Rank

Percentile

47.88 43.51 39.30 37.32 35.27 34.64 33.94 31.73 27.48 27.34 27.10 26.00 25.25 25.18 24.86 24.56 21.64 19.98 19.66 19.31 19.26 19.15 19.06 18.91 17.35 16.96 16.60 16.53 15.59 15.43 14.47 12.55 12.29 9.59 9.24 8.22 7.17 6.84 5.73 2.01 1.24 1.06 0.35 0.05

1 2 4 5 7 8 9 10 11 12 13 15 16 17 18 19 21 23 24 25 26 27 28 29 31 32 33 34 35 36 37 39 40 42 43 44 45 46 47 48 49 50 51 52

98.08 96.15 92.31 90.38 86.54 84.62 82.69 80.77 78.85 76.92 75.00 71.15 69.23 67.31 65.38 63.46 59.62 55.77 53.85 51.92 50.00 48.08 46.15 44.23 40.38 38.46 36.54 34.62 32.69 30.77 28.85 25.00 23.08 19.23 17.31 15.38 13.46 11.54 9.62 7.69 5.77 3.85 1.92 0.00

Region

_________________________________________________________________________________________________________

Thailand Canada Japan Australia Norway Portugal Sweden USA Malaysia Netherlands Pakistan Finland Turkey Mexico Philippines New Zealand the United Kingdom Austria Indonesia Chile Belgium Spain Israel Ireland South Africa Italy China France South Korea Peru Switzerland Hong Kong Denmark India Czech Republic Luxembourg Germany Brazil Poland Singapore Hungary Russian Federation Greece Taiwan

Asia North America Asia Oceana Europe Europe Europe North America Asia Europe the Middle East Europe the Middle East Latin America Asia Oceana Europe Europe Asia Latin America Europe Europe the Middle East Europe Africa Europe Asia Europe Asia Latin America Europe Asia Europe Asia Europe Europe Europe Latin America Europe Asia Europe Europe Europe Asia

_________________________________________________________________________________________________________





46

Long Term Debt (Electric Services) Countries in Europe


Rank

Percentile

35.27 34.64 33.94 33.16 32.06 27.34 27.14 27.08 26.00 25.43 23.99 22.01 21.64 21.39 20.64 19.98 19.79 19.30 19.30 19.26 19.15 18.91 17.98 17.10 16.96 16.53 15.03 14.47 13.50 13.47 12.29 12.03 9.24 8.77 8.77 8.22 7.17 5.73 5.15 4.96 4.95 1.94 1.24 1.11 1.06 1.06 1.06 1.04 0.35 0.32 0.32

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Norway Portugal Sweden Cyprus Iceland Netherlands Belarus Slovakia Finland Andorra Romania Bosnia & Herzegovina the United Kingdom Macedonia Serbia & Montenegro Austria San Marino Guernsey Jersey Belgium Spain Ireland Slovenia Vatican City Italy France Estonia Switzerland Liechtenstein Albania Denmark Faroe Islands Czech Republic Latvia Croatia Luxembourg Germany Poland Moldova Kazakhstan Bulgaria Monaco Hungary Ukraine Russian Federation Gibraltar Lithuania Georgia Greece Malta Isle of Man

_________________________________________________________________________________________________________




47

Total Liabilities Countries


Rank

Percentile

75.08 74.25 67.54 66.32 65.55 65.44 62.79 62.51 62.47 62.13 61.96 60.76 60.43 59.09 58.60 58.47 57.43 57.36 56.43 56.28 54.92 54.90 54.30 52.49 51.40 50.97 50.43 49.90 49.02 47.51 47.29 44.43 40.70 40.13 38.91 38.12 36.90 36.84 32.78 30.77 29.51 29.05 27.84 22.80 17.76

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 26 27 28 29 30 32 33 36 37 38 39 40 41 42 44 45 47 48 50 51 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 39.62 37.74 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 11.32 9.43 5.66 3.77 0.00

Region

_________________________________________________________________________________________________________

Netherlands Japan USA France Pakistan Canada Norway Germany Sweden Turkey Mexico Portugal Switzerland South Africa Finland Thailand Italy Austria Belgium Australia South Korea the United Kingdom Spain Malaysia Israel Ireland Denmark New Zealand Chile Czech Republic India Luxembourg Peru Singapore Philippines Taiwan China Hungary Greece Indonesia Hong Kong Poland Brazil Russian Federation Argentina

Europe Asia North America Europe the Middle East North America Europe Europe Europe the Middle East Latin America Europe Europe Africa Europe Asia Europe Europe Europe Oceana Asia Europe Europe Asia the Middle East Europe Europe Oceana Latin America Europe Asia Europe Latin America Asia Asia Asia Asia Europe Europe Asia Asia Europe Latin America Europe Latin America

_________________________________________________________________________________________________________





48

Total Liabilities (Electric Services) Countries in Europe


Rank

Percentile

75.08 68.24 66.32 62.79 62.51 62.47 60.76 60.43 59.03 58.60 58.16 57.89 57.43 57.36 56.81 56.43 56.39 55.39 55.39 54.90 54.30 54.17 52.94 52.65 51.67 50.97 50.97 50.78 50.43 47.51 46.87 46.77 45.09 45.07 44.43 38.92 36.84 35.53 33.13 32.78 31.50 31.01 30.39 29.99 29.05 28.30 26.12 25.13 25.09 22.80 22.75

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Netherlands Iceland France Norway Germany Sweden Portugal Switzerland Romania Finland Cyprus Vatican City Italy Austria San Marino Belgium Liechtenstein Guernsey Jersey the United Kingdom Spain Bosnia & Herzegovina Estonia Macedonia Andorra Ireland Slovenia Serbia & Montenegro Denmark Czech Republic Belarus Slovakia Latvia Croatia Luxembourg Monaco Hungary Albania Ukraine Greece Gibraltar Georgia Malta Isle of Man Poland Faroe Islands Moldova Kazakhstan Bulgaria Russian Federation Lithuania

_________________________________________________________________________________________________________




49

Common Equity Countries


Rank

Percentile

82.24 75.90 66.94 63.16 61.88 61.34 59.30 57.89 55.37 54.20 53.41 52.71 51.89 50.11 50.10 49.43 49.03 48.61 48.12 45.31 44.67 42.89 41.92 41.89 40.83 40.69 39.62 38.53 37.87 37.77 37.27 37.02 34.37 33.98 31.25 31.01 30.41 30.36 30.17 29.44 29.11 27.97 27.66 25.26 17.40

1 2 3 4 5 6 7 8 9 10 11 12 14 15 16 17 18 19 20 21 22 24 26 27 28 29 30 31 32 33 35 36 38 40 42 43 44 45 46 47 48 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 54.72 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 33.96 32.08 28.30 24.53 20.75 18.87 16.98 15.09 13.21 11.32 9.43 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Argentina Russian Federation Poland Hungary Taiwan Hong Kong Peru China Singapore Luxembourg Greece India Czech Republic Philippines New Zealand Israel Ireland Brazil Chile Malaysia South Korea the United Kingdom Australia Spain Thailand South Africa Indonesia Italy Turkey Mexico Switzerland Belgium Pakistan Denmark Portugal Austria Finland USA Norway Canada Germany Sweden France Japan Netherlands

Latin America Europe Europe Europe Asia Asia Latin America Asia Asia Europe Europe Asia Europe Asia Oceana the Middle East Europe Latin America Latin America Asia Asia Europe Oceana Europe Asia Africa Asia Europe the Middle East Latin America Europe Europe the Middle East Europe Europe Europe Europe North America Europe North America Europe Europe Europe Asia Europe

_________________________________________________________________________________________________________





50

Common Equity (Electric Services) Countries in Europe


Rank

Percentile

75.90 75.72 66.94 63.16 60.19 58.82 57.92 57.81 56.80 54.20 54.00 53.69 53.41 53.17 52.37 52.25 51.89 51.88 51.76 49.50 49.25 49.23 49.03 48.85 43.07 42.89 41.89 39.32 38.84 38.53 37.27 37.02 35.99 34.77 33.98 33.02 32.10 31.25 31.01 30.96 30.71 30.67 30.41 30.17 29.94 29.94 29.92 29.11 27.97 27.66 17.40

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Russian Federation Lithuania Poland Hungary Moldova Faroe Islands Kazakhstan Bulgaria Ukraine Luxembourg Gibraltar Monaco Greece Georgia Belarus Slovakia Czech Republic Andorra Albania Malta Latvia Croatia Ireland Isle of Man Estonia the United Kingdom Spain Slovenia Vatican City Italy Switzerland Belgium Romania Liechtenstein Denmark Bosnia & Herzegovina Macedonia Portugal Austria Serbia & Montenegro San Marino Iceland Finland Norway Jersey Guernsey Cyprus Germany Sweden France Netherlands

_________________________________________________________________________________________________________




51

Retained Earnings Countries


Rank

Percentile

45.06 44.69 42.13 32.11 27.59 24.28 23.86 22.97 22.91 22.44 21.66 20.16 19.79 17.78 17.78 17.13 16.12 15.80 15.76 15.56 13.28 12.83 11.11 10.61 9.62 9.34 9.10 8.60 7.90 7.55 7.04 6.34 6.30 6.05 5.48 3.80 3.34 3.20 2.86 2.50 1.44 0.00 -1.04

1 2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 19 20 21 22 26 27 29 30 31 32 33 34 35 36 37 39 40 41 42 43 44 45 46 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 70.59 68.63 66.67 62.75 60.78 58.82 56.86 49.02 47.06 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 5.88 3.92 1.96 0.00

Region

_________________________________________________________________________________________________________

Israel Ireland India South Africa the United Kingdom Norway Switzerland Austria New Zealand Hong Kong Philippines Finland Denmark Thailand Czech Republic Indonesia Malaysia Turkey Mexico Japan Singapore Canada USA Germany Portugal South Korea Greece Russian Federation Chile China Spain Argentina Italy Australia Sweden Peru Luxembourg France Brazil Taiwan Hungary Pakistan Poland

the Middle East Europe Asia Africa Europe Europe Europe Europe Oceana Asia Asia Europe Europe Asia Europe Asia Asia the Middle East Latin America Asia Asia North America North America Europe Europe Asia Europe Europe Latin America Asia Europe Latin America Europe Oceana Europe Latin America Europe Europe Latin America Asia Europe the Middle East Europe

_________________________________________________________________________________________________________





52

Retained Earnings (Electric Services) Countries in Europe


Rank

Percentile

44.69 27.59 24.28 23.86 23.73 22.97 22.75 22.26 22.19 22.19 21.52 20.16 19.79 17.78 16.87 16.86 15.02 13.78 13.39 12.92 12.88 11.22 10.61 9.62 9.21 9.10 9.00 8.60 8.58 8.43 8.32 7.04 6.72 6.70 6.61 6.35 6.30 5.48 3.34 3.31 3.20 1.44 1.29 1.23 1.21 -0.90 -0.90 -0.93 -1.04

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Ireland the United Kingdom Norway Switzerland Andorra Austria San Marino Liechtenstein Guernsey Jersey Faroe Islands Finland Denmark Czech Republic Latvia Croatia Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Monaco Iceland Germany Portugal Cyprus Greece Estonia Russian Federation Lithuania Malta Isle of Man Spain Belarus Slovakia Slovenia Vatican City Italy Sweden Luxembourg Albania France Hungary Ukraine Gibraltar Georgia Bulgaria Kazakhstan Moldova Poland

_________________________________________________________________________________________________________





3.4 3.4.1


IN

53

ESTONIA: INCOME STRUCTURE

Overview

In this chapter we consider the income structure of companies operating in Estonia benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of income is then presented for the proto-typical firm involved in electric services operating in Estonia and the average global benchmarks (total revenue = 100 percent). For ratios where there are large deviations between Estonia and the benchmarks, graphics are provided. Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis income ratios are highlighted across countries in the comparison group.

3.4.2

Income Statements – Definitions of Terms

The following definitions are provided for those less familiar with the income-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of income, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Amortization. Amortization generally refers to the depreciation, depletion, or charge-off to expense of intangible and tangible assets over a period of time. Amortization is commonly understood to be the taking as an expense (writing off) of the loss of value of an intangible asset such as a copyright, a patent, or a mailing list, in an accounting period.

•

Cost of Goods Sold (excluding depreciation). For retail companies, cost of goods sold is generally defined as the equivalent of starting inventory plus purchases minus ending inventory. In manufacturing, cost of goods sold is defined to equal the starting inventory plus the cost of goods manufactured minus ending inventory. Most pure service firms do not generally have cost of goods sold.

•

Current Domestic Income Tax. Current domestic income taxes are commonly defined as compulsory charges levied by the government where the company is located on current income.

•

Depletion. Depletion is commonly defined to be included as one of the elements of amortization, and is understood to be the portion of the carrying value (other than the portion associated with tangible assets) prorated in each accounting period for financial reporting purposes.

•

Depreciation. Depreciation generally is defined as the expiration in the service life of fixed assets, other than depletable assets, attributable to wear and tear, deterioration, action of the physical elements, inadequacy and obsolescence. Depreciation is commonly defined as the portion of the cost of a fixed asset charged as an expense during a particular period. In accounting for depreciation, the cost of a fixed asset, less any salvage value, is prorated over the estimated service life of such an asset, and each period is charged with a portion of such cost. Through this process, the cost of the asset is ultimately charged off as an expense.

•

Earnings Before Interest and Taxes (EBIT). EBIT is a financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and non-operating profit before the deduction of interest and income taxes.




54

•

Gross Income. Gross income is commonly defined as all the money, goods, and property received by the company that must be included as taxable income.

•

Income Taxes. Income taxes are defined to include those taxes levied by state, federal, and local governments on the company's reported accounting profit. Income taxes generally include both deferred and paid taxes. They are generally determined after the interest expense has been deducted.

•

Interest Expense on Debt. Interest expenses on debt are those which are spent on current debt and added to the net income so avoid underestimating interest coverage.

•

Minority Interest. Minority interest is the proportional share of the minority ownership's interest (less than 50 percent) in the earnings or losses.

•

Net Income Available to Common. Net income available to common is defined as the net income available to common stockholders.

•

Net Income Before Preferred Dividends. Net income before preferred dividends is generally calculated as the difference between total revenues and total expense prior to the granting of preferred dividends.

•

Net Sales or Revenues. Revenues or net sales are defined as payments made to and received by an entity. May take the form of taxes, user fees, fines, fees for service, and so on.

•

Non-Operating Interest Income. Non-operating interest income is generally understood to be any interest received (e.g., royalty, production payment, net profits interest) that does not involve the operation of the company.

•

Operating Expenses. Operating expenses are generally defined as those incurred in paying for the company’s day-to-day activities.

•

Operating Income. Operating income is generally defined to equal operating revenues less operating expenses. It typically excludes items of other revenue and expense such as equity in earnings of unconsolidated companies, dividends, interest income and expense, income taxes, extraordinary items, and cumulative effect of accounting changes.

•

Pretax Income. Pretax income is generally defined as income before tax deductions.

•

Selling, General & Administrative Expenses. Selling, general and administrative expenses are expenses independent from cost of sales for the purpose of illustrating the amount of the company's selling and administrative costs. Generally included in this figure are the costs of employees' salaries, commissions, and travel expenses; company payroll and office costs; and advertising and promotion.




3.4.3

55

Income Structure: Outlook

Using the methodology described in the introduction, the following table summarizes income structure benchmarks for firms involved in electric services in Estonia. To allow comparable benchmarking, a common index of Net Sales or Revenues = 100 is used. All figures are current-year projections for companies operating in Estonia based on latest financial results available. Income Structure Estonia Europe World Avg. _________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Pretax Income Income Taxes Current Domestic Income Tax Minority Interest Net Income Before Extra Items/Prefer Dividends Net Income Before Preferred Dividends Net Income Available to Common

100.00 79.05 5.38 11.98 4.83 89.43 0.41 6.73 0.35 0.09 0.65 0.15 7.68 1.45 6.23 2.11 2.57 0.03 4.10 4.10 4.10

100.00 64.69 10.02 21.70 9.88 84.13 4.79 11.40 0.88 1.73 3.20 5.92 19.11 4.38 14.74 3.64 2.69 0.04 11.09 11.10 11.02

100.00 55.52 9.96 26.33 5.29 69.79 3.78 20.28 0.34 0.50 2.12 1.81 23.37 4.13 19.38 4.49 2.11 1.31 13.56 13.55 13.54

_________________________________________________________________________________________________________





3.4.4

56

Large Variances: Income

The following graphics summarize for electric services the large income structure gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Cost of Goods Sold (Excluding Depreciation) 80

79.05 64.69

60

55.52

40

23.53

20 0 Estonia

Europe

World Average

Gap

Gap: Depreciation, Depletion & Amortization 15 10.02

10

9.96

5.38 5 0 -5 Estonia

Europe

World Average

-4.58 Gap

Gap: Gross Income 30 20

21.7

26.33

11.98

10 0 -10

-14.35

-20 Estonia


Europe

World Average

Gap



57

Gap: Other Operating Expenses 100

89.43

84.13 69.79

80 60 40

19.64

20 0 Estonia

Europe

World Average

Gap

Gap: Operating Expenses - Total 6

4.79

4 2

3.78

0.41

0 -2 -3.37

-4 Estonia

Europe

World Average

Gap

Gap: Operating Income 30

20.28

20 10

6.73

11.4

0 -10

-13.55

-20 Estonia

Europe

World Average

Gap

Gap: Earnings Before Interest and Taxes (EBIT) 30

19.11

20 10

23.37

7.68

0 -10

-15.69

-20 Estonia


Europe

World Average

Gap



58

Gap: Pretax Income 20 10

14.74

19.38

6.23

0 -10

-13.15

-20 Estonia

Europe

World Average

Gap

Gap: Net Income Before Extra Items/Prefer Dividends 15

11.09

13.56

10 4.1

5 0 -5

-9.46 Gap

-10 Estonia

Europe

World Average

Gap: Net Income Before Preferred Dividends 15

11.1

13.55

10 4.1

5 0 -5

-9.45 Gap

-10 Estonia

Europe

World Average

Gap: Net Income Available to Common 15

11.02

13.54

10 4.1

5 0 -5 -10

Estonia


Europe

World Average

-9.44 Gap



3.4.5

59


We now consider the distribution of income ratios for electric services using ranks and percentiles. What percent of countries have a value lower or higher than Estonia (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of income structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical income ratios are highlighted in additional tables. Income Structure

Estonia

Rank of Total

Percentile

100.00 79.05 5.38 11.98 4.83 89.43 0.41 6.73 0.35 0.09 0.65 0.15 7.68 1.45 6.23 2.11 2.57 0.03 4.10 4.10 4.10

9 of 53 50 of 54 47 of 53 32 of 37 18 of 52 43 of 45 45 of 54 16 of 29 30 of 37 39 of 52 47 of 54 50 of 54 46 of 54 45 of 54 37 of 54 14 of 39 32 of 37 48 of 54 48 of 54 48 of 54

83.02 7.41 11.32 13.51 65.38 4.44 16.67 44.83 18.92 25.00 12.96 7.41 14.81 16.67 31.48 64.10 13.51 11.11 11.11 11.11

_________________________________________________________________________________________________________


_________________________________________________________________________________________________________





60

Cost of Goods Sold (Excluding Depreciation) Countries

Value (total revenue = 100)

Rank

Percentile

89.77 85.48 84.41 81.99 81.66 80.98 80.41 80.14 78.27 78.04 76.78 76.76 76.59 72.32 70.33 69.01 69.00 64.56 64.42 64.23 63.85 63.75 63.00 59.48 59.13 59.10 58.60 58.44 56.71 55.31 55.19 54.97 53.65 53.20 51.86 50.94 50.44 49.46 46.57 43.59 41.85 40.78 37.25 29.45

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 34 35 36 37 38 39 40 41 42 43 45 50

98.08 96.15 94.23 92.31 90.38 88.46 86.54 84.62 82.69 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 44.23 42.31 40.38 38.46 34.62 32.69 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 13.46 3.85

Region

_________________________________________________________________________________________________________

Netherlands Belgium Hungary South Korea Israel Ireland Poland Russian Federation Czech Republic Denmark Portugal Germany Taiwan India France New Zealand Austria Spain Singapore Finland Luxembourg Sweden Switzerland Japan Canada Pakistan Turkey Mexico the United Kingdom Chile Argentina USA China Italy Peru Hong Kong Norway Brazil Malaysia Greece Australia Thailand Philippines Indonesia

Europe Europe Europe Asia the Middle East Europe Europe Europe Europe Europe Europe Europe Asia Asia Europe Oceana Europe Europe Asia Europe Europe Europe Europe Asia North America the Middle East the Middle East Latin America Europe Latin America Latin America North America Asia Europe Latin America Asia Europe Latin America Asia Europe Oceana Asia Asia Asia

_________________________________________________________________________________________________________





61

Cost of Goods Sold (Excluding Depreciation) (Electric Services) Countries in Europe


Rank

Percentile

89.77 85.48 84.41 80.98 80.41 80.14 79.95 79.05 78.27 78.04 76.78 76.76 75.91 74.30 74.26 73.49 72.29 72.17 71.46 71.06 70.33 69.57 69.44 69.00 68.35 66.64 66.64 64.56 64.23 63.85 63.75 63.00 62.47 60.61 58.79 56.71 55.68 55.53 53.63 53.20 51.09 50.44 49.66 48.85 47.90 45.27 43.59 40.40 39.87 35.71 35.63

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Netherlands Belgium Hungary Ireland Poland Russian Federation Lithuania Estonia Czech Republic Denmark Portugal Germany Ukraine Latvia Croatia Cyprus Moldova Gibraltar Andorra Georgia France Kazakhstan Bulgaria Austria San Marino Jersey Guernsey Spain Finland Luxembourg Sweden Switzerland Monaco Slovenia Liechtenstein the United Kingdom Romania Iceland Vatican City Italy Bosnia & Herzegovina Norway Macedonia Faroe Islands Serbia & Montenegro Albania Greece Malta Isle of Man Belarus Slovakia

_________________________________________________________________________________________________________




62

Selling, General & Administrative Expenses Countries


Rank

Percentile

30.95 28.57 28.31 27.14 25.60 19.02 16.57 15.93 14.74 14.45 12.69 11.91 11.61 10.74 9.70 9.22 8.79 8.40 7.62 7.60 7.48 7.23 6.91 6.11 5.88 5.47 5.37 5.01 4.48 3.93 0.95 0.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 24 25 26 28 29 31 32 33 35 36

97.22 94.44 91.67 88.89 86.11 83.33 80.56 77.78 75.00 72.22 69.44 66.67 63.89 61.11 58.33 55.56 52.78 50.00 47.22 44.44 41.67 38.89 33.33 30.56 27.78 22.22 19.44 13.89 11.11 8.33 2.78 0.00

Region

_________________________________________________________________________________________________________

Japan Norway Greece Brazil France Italy Finland the United Kingdom USA Canada Chile New Zealand Taiwan Australia Singapore Denmark Sweden Poland Turkey Mexico Germany Malaysia Thailand Switzerland Hungary Hong Kong China South Korea Peru Pakistan Austria Russian Federation

Asia Europe Europe Latin America Europe Europe Europe Europe North America North America Latin America Oceana Asia Oceana Asia Europe Europe Europe the Middle East Latin America Europe Asia Asia Europe Europe Asia Asia Asia Latin America the Middle East Europe Europe

_________________________________________________________________________________________________________





63

Selling, General & Administrative Expenses (Electric Services) Countries in Europe


Rank

Percentile

28.57 28.31 26.24 25.89 25.60 19.17 19.02 16.57 15.93 14.89 12.34 9.40 9.22 8.79 8.40 7.55 7.48 7.27 7.26 7.24 6.64 6.46 6.23 6.11 5.88 5.71 5.28 5.25 5.02 4.95 4.83 3.91 0.95 0.94 0.92 0.92 0.06 0.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

97.37 94.74 92.11 89.47 86.84 84.21 81.58 78.95 76.32 73.68 71.05 68.42 65.79 63.16 60.53 57.89 55.26 52.63 50.00 47.37 44.74 42.11 39.47 36.84 34.21 31.58 28.95 26.32 23.68 21.05 18.42 15.79 13.16 10.53 7.89 5.26 2.63 0.00

_________________________________________________________________________________________________________

Norway Greece Malta Isle of Man France Vatican City Italy Finland the United Kingdom Iceland Andorra Monaco Denmark Sweden Poland Moldova Germany Kazakhstan Bulgaria Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Switzerland Hungary Liechtenstein Ukraine Faroe Islands Gibraltar Georgia Estonia Albania Austria San Marino Guernsey Jersey Russian Federation Lithuania

_________________________________________________________________________________________________________





64

Operating Expenses - Total Countries


Rank

Percentile

23.87 15.69 14.73 13.28 13.25 12.63 12.53 10.96 10.48 10.18 9.22 8.71 7.49 7.17 6.45 6.37 5.86 5.22 5.09 4.88 3.56 3.18 3.08 2.37 1.97 1.91 1.86 1.81 1.70 1.28 0.90 0.83 0.62 0.59 0.43 0.02 0.01

1 2 3 4 5 6 7 9 10 11 14 15 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 39 41 42 43 44

97.73 95.45 93.18 90.91 88.64 86.36 84.09 79.55 77.27 75.00 68.18 65.91 61.36 59.09 56.82 54.55 52.27 50.00 47.73 45.45 43.18 40.91 38.64 36.36 34.09 31.82 29.55 27.27 25.00 22.73 20.45 18.18 11.36 6.82 4.55 2.27 0.00

Region

_________________________________________________________________________________________________________

Belgium Singapore Norway USA Philippines Israel Ireland Switzerland Indonesia Canada Germany France Russian Federation Luxembourg the United Kingdom Australia Spain Austria Italy Brazil Hong Kong Czech Republic China Hungary Portugal Japan India Poland Malaysia Finland Thailand Peru Netherlands Sweden South Korea Pakistan Denmark

Europe Asia Europe North America Asia the Middle East Europe Europe Asia North America Europe Europe Europe Europe Europe Oceana Europe Europe Europe Latin America Asia Europe Asia Europe Europe Asia Asia Europe Asia Europe Asia Latin America Europe Europe Asia the Middle East Europe

_________________________________________________________________________________________________________





65

Operating Expenses - Total (Electric Services) Countries in Europe


Rank

Percentile

23.87 15.21 14.73 13.41 12.53 10.96 10.22 9.89 9.87 9.22 8.71 7.49 7.47 7.17 6.45 5.86 5.50 5.22 5.17 5.13 5.09 5.04 5.04 3.42 3.18 3.02 3.02 2.37 2.13 2.02 1.99 1.97 1.88 1.81 1.63 1.57 1.57 1.28 0.72 0.62 0.59 0.41 0.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

97.67 95.35 93.02 90.70 88.37 86.05 83.72 81.40 79.07 76.74 74.42 72.09 69.77 67.44 65.12 62.79 60.47 58.14 55.81 53.49 51.16 48.84 46.51 44.19 41.86 39.53 37.21 34.88 32.56 30.23 27.91 25.58 23.26 20.93 18.60 16.28 13.95 11.63 9.30 6.98 4.65 2.33 0.00

_________________________________________________________________________________________________________

Belgium Monaco Norway Iceland Ireland Switzerland Liechtenstein Belarus Slovakia Germany France Russian Federation Lithuania Luxembourg the United Kingdom Spain Slovenia Austria San Marino Vatican City Italy Guernsey Jersey Faroe Islands Czech Republic Latvia Croatia Hungary Ukraine Gibraltar Georgia Portugal Cyprus Poland Moldova Kazakhstan Bulgaria Finland Albania Netherlands Sweden Estonia Denmark

_________________________________________________________________________________________________________





66

Operating Income Countries


Rank

Percentile

44.32 37.92 35.04 34.23 33.02 32.11 31.87 27.86 26.54 25.24 25.01 24.94 24.39 20.12 19.55 18.79 18.52 18.49 18.45 16.94 16.67 15.07 13.05 12.87 12.29 11.88 9.68 9.41 9.26 9.14 8.89 8.68 8.29 7.99 7.11 6.98 6.16 4.75 3.71 3.68 2.76 2.16 1.13 0.69 -2.59

1 2 4 5 6 9 10 13 14 15 17 18 19 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53

98.11 96.23 92.45 90.57 88.68 83.02 81.13 75.47 73.58 71.70 67.92 66.04 64.15 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Philippines Thailand Indonesia Hong Kong Malaysia Peru Australia Pakistan China Argentina Turkey Mexico Chile Sweden South Africa Greece the United Kingdom India Canada USA Spain Brazil New Zealand Switzerland Singapore Italy Portugal Czech Republic Luxembourg Japan Finland Belgium Austria Denmark France South Korea Russian Federation Norway Israel Ireland Hungary Germany Taiwan Netherlands Poland

Asia Asia Asia Asia Asia Latin America Oceana the Middle East Asia Latin America the Middle East Latin America Latin America Europe Africa Europe Europe Asia North America North America Europe Latin America Oceana Europe Asia Europe Europe Europe Europe Asia Europe Europe Europe Europe Europe Asia Europe Europe the Middle East Europe Europe Europe Asia Europe Europe

_________________________________________________________________________________________________________





67

Operating Income (Electric Services) Countries in Europe


Rank

Percentile

33.06 32.98 32.82 28.02 23.76 21.81 21.19 20.44 20.12 18.79 18.52 17.41 17.18 17.11 16.67 15.65 13.52 12.87 12.01 11.97 11.92 11.88 9.68 9.41 9.26 9.26 8.93 8.93 8.89 8.68 8.29 8.22 8.01 8.01 7.99 7.11 6.73 6.16 6.14 4.75 3.68 2.76 2.48 2.36 2.32 2.16 0.69 -2.24 -2.24 -2.33 -2.59

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belarus Slovakia Faroe Islands Albania Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Sweden Greece the United Kingdom Malta Isle of Man Iceland Spain Slovenia Andorra Switzerland Liechtenstein Vatican City Monaco Italy Portugal Czech Republic Cyprus Luxembourg Latvia Croatia Finland Belgium Austria San Marino Jersey Guernsey Denmark France Estonia Russian Federation Lithuania Norway Ireland Hungary Ukraine Gibraltar Georgia Germany Netherlands Bulgaria Kazakhstan Moldova Poland

_________________________________________________________________________________________________________




68

Earnings Before Interest and Taxes (EBIT) Countries


Rank

Percentile

59.23 56.58 46.01 41.49 37.74 36.90 36.38 35.92 35.82 32.78 30.79 30.56 28.23 25.76 24.97 23.99 23.62 23.16 22.75 22.52 21.88 20.93 20.90 20.28 19.48 18.67 16.93 16.52 16.02 13.31 12.72 12.58 12.34 11.92 11.29 9.69 8.71 8.69 8.67 8.21 7.97 5.53 3.43 3.40 0.66

1 2 3 4 6 7 8 9 10 15 17 18 19 21 22 23 24 25 26 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53

98.11 96.23 94.34 92.45 88.68 86.79 84.91 83.02 81.13 71.70 67.92 66.04 64.15 60.38 58.49 56.60 54.72 52.83 50.94 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Greece New Zealand Philippines Thailand Malaysia Hong Kong Indonesia Turkey Mexico Australia Pakistan Peru China Chile Luxembourg South Africa Sweden Argentina India Canada Spain the United Kingdom Switzerland Brazil Czech Republic Italy USA Singapore Finland Austria Belgium Germany Portugal Russian Federation Taiwan Norway France Netherlands Japan Denmark South Korea Hungary Israel Ireland Poland

Europe Oceana Asia Asia Asia Asia Asia the Middle East Latin America Oceana the Middle East Latin America Asia Latin America Europe Africa Europe Latin America Asia North America Europe Europe Europe Latin America Europe Europe North America Asia Europe Europe Europe Europe Europe Europe Asia Europe Europe Europe Asia Europe Asia Europe the Middle East Europe Europe

_________________________________________________________________________________________________________





69

Earnings Before Interest and Taxes (EBIT) (Electric Services) Countries in Europe


Rank

Percentile

59.23 58.59 54.90 54.18 35.48 35.40 35.38 34.13 31.32 30.44 29.36 26.68 24.97 23.62 21.88 20.93 20.90 20.54 19.51 19.48 18.82 18.67 18.49 18.48 17.10 16.02 16.02 13.31 13.18 12.85 12.85 12.72 12.58 12.34 11.92 11.89 11.82 9.69 8.71 8.69 8.21 7.68 5.53 4.97 4.73 4.65 3.40 0.66 0.59 0.57 0.57

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Greece Andorra Malta Isle of Man Belarus Slovakia Faroe Islands Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania Luxembourg Sweden Spain the United Kingdom Switzerland Slovenia Liechtenstein Czech Republic Vatican City Italy Latvia Croatia Iceland Monaco Finland Austria San Marino Jersey Guernsey Belgium Germany Portugal Russian Federation Lithuania Cyprus Norway France Netherlands Denmark Estonia Hungary Ukraine Gibraltar Georgia Ireland Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________




70

Pretax Income Countries


Rank

Percentile

58.88 51.62 35.41 34.75 32.00 28.00 26.61 26.54 25.58 25.12 24.71 23.67 23.12 22.61 21.79 19.77 17.20 17.02 15.96 15.93 15.21 14.04 13.40 13.30 12.96 11.35 11.20 11.09 10.56 10.31 9.54 9.46 9.06 8.09 6.52 6.47 5.43 5.42 5.17 4.49 2.96 2.60 1.66 1.65 -2.36

1 2 3 4 5 7 9 10 12 13 14 16 17 18 19 22 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53

98.11 96.23 94.34 92.45 90.57 86.79 83.02 81.13 77.36 75.47 73.58 69.81 67.92 66.04 64.15 58.49 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Greece New Zealand Philippines Hong Kong Malaysia Indonesia Turkey Mexico China Thailand Peru Luxembourg Pakistan Argentina India Chile Switzerland Australia Spain the United Kingdom Italy South Africa Singapore Canada Sweden Russian Federation Taiwan USA Germany Brazil Finland Czech Republic Austria Belgium France South Korea Japan Denmark Hungary Portugal Netherlands Norway Israel Ireland Poland

Europe Oceana Asia Asia Asia Asia the Middle East Latin America Asia Asia Latin America Europe the Middle East Latin America Asia Latin America Europe Oceana Europe Europe Europe Africa Asia North America Europe Europe Asia North America Europe Latin America Europe Europe Europe Europe Europe Asia Asia Europe Europe Europe Europe Europe the Middle East Europe Europe

_________________________________________________________________________________________________________





71

Pretax Income (Electric Services) Countries in Europe


Rank

Percentile

58.88 54.57 53.85 53.46 33.32 26.87 26.81 25.28 23.67 23.20 22.55 21.75 21.57 17.20 16.05 15.96 15.93 15.34 15.21 14.98 13.00 12.96 11.35 11.32 11.21 10.56 9.54 9.46 9.06 8.98 8.97 8.97 8.75 8.75 8.09 6.52 6.23 5.42 5.17 4.65 4.49 4.42 4.35 4.30 2.96 2.60 1.65 -2.04 -2.04 -2.12 -2.36

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Greece Malta Isle of Man Andorra Faroe Islands Belarus Slovakia Romania Luxembourg Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania Switzerland Liechtenstein Spain the United Kingdom Vatican City Italy Slovenia Monaco Sweden Russian Federation Lithuania Iceland Germany Finland Czech Republic Austria Latvia Croatia San Marino Jersey Guernsey Belgium France Estonia Denmark Hungary Ukraine Portugal Gibraltar Georgia Cyprus Netherlands Norway Ireland Bulgaria Kazakhstan Moldova Poland

_________________________________________________________________________________________________________




72

Income Taxes Countries


Rank

Percentile

13.57 9.88 8.63 7.84 7.09 7.07 6.96 5.81 5.50 5.19 4.82 4.52 4.31 4.14 4.05 4.02 3.87 3.63 3.45 3.27 3.14 2.75 2.69 2.67 2.57 2.39 2.31 2.26 2.21 2.19 2.19 1.99 1.95 1.87 1.73 1.40 1.24 0.97 0.91 0.72 0.40 0.40 0.29 0.04 -0.32

1 2 3 4 6 7 8 11 12 13 14 15 16 17 18 19 20 21 22 23 25 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 46 49 50 51 52 53

98.11 96.23 94.34 92.45 88.68 86.79 84.91 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 52.83 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 13.21 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Greece Peru Argentina Malaysia Turkey Mexico India Italy China Russian Federation Hong Kong Spain Australia Switzerland Brazil USA Thailand Luxembourg Sweden the United Kingdom Germany New Zealand Portugal Singapore Finland Czech Republic Japan Chile Denmark Canada South Korea Austria Belgium France Taiwan Pakistan South Africa Hungary Philippines Indonesia Israel Ireland Norway Netherlands Poland

Europe Latin America Latin America Asia the Middle East Latin America Asia Europe Asia Europe Asia Europe Oceana Europe Latin America North America Asia Europe Europe Europe Europe Oceana Europe Asia Europe Europe Asia Latin America Europe North America Asia Europe Europe Europe Asia the Middle East Africa Europe Asia Asia the Middle East Europe Europe Europe Europe

_________________________________________________________________________________________________________





73

Income Taxes (Electric Services) Countries in Europe


Rank

Percentile

13.57 12.58 12.41 8.62 6.89 6.87 6.74 6.19 6.01 5.85 5.81 5.80 5.19 5.17 4.62 4.52 4.24 4.14 4.06 3.86 3.63 3.45 3.27 3.14 2.85 2.69 2.59 2.57 2.57 2.39 2.26 2.26 2.21 2.11 1.99 1.97 1.95 1.92 1.92 1.87 0.97 0.87 0.83 0.82 0.40 0.29 0.04 -0.28 -0.28 -0.29 -0.32

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Greece Malta Isle of Man Albania Belarus Slovakia Romania Bosnia & Herzegovina Macedonia Vatican City Italy Serbia & Montenegro Russian Federation Lithuania Faroe Islands Spain Slovenia Switzerland Iceland Liechtenstein Luxembourg Sweden the United Kingdom Germany Andorra Portugal Monaco Cyprus Finland Czech Republic Latvia Croatia Denmark Estonia Austria San Marino Belgium Jersey Guernsey France Hungary Ukraine Gibraltar Georgia Ireland Norway Netherlands Bulgaria Kazakhstan Moldova Poland

_________________________________________________________________________________________________________




3.5 3.5.1

74

FINANCIAL RETURNS IN ESTONIA: PROFITABILITY RATIOS Overview

In this chapter we consider additional financial ratios estimated for firms involved in electric services operating in Estonia benchmarked against global averages. The chapter begins by defining relevant terms. Estimates are then presented for the proto-typical firm operating in Estonia compared to average global benchmarks. For ratios where there are large deviations between the average firm in Estonia and the benchmarks, graphics are provided. Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key ratios are highlighted across countries in the comparison group.

3.5.2

Ratios – Definitions of Terms

The following definitions are provided for those less familiar with financial ratio analysis. As this chapter deals with the global benchmarking of ratios, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accounts Receivables Days. The number of days' receivable sales generally correlates to the amount of the accounts receivables to the average daily sales on account. Accounts receivables days is often determined by dividing the gross receivables by (net sales/365).

•

Cash Earnings Return On Equity (%). Cash earnings return on equity generally measures the return of revenues to the shareholders. This ratio is generally calculated by dividing (net income before nonrecurring items minus preferred dividends) by the average common equity.

•

Cash Flow. Cash flow is generally defined as being equal to the company's net income plus the charge-off amounts for depreciation, depletion, amortization, extraordinary charges to reserves. These are bookkeeping deductions which are not paid out as cash.

•

Current Ratio. The current ratio is generally defined as a ratio of liquidity measuring the ability of a business to pay its current obligations when due. The current ratio is generally calculated by dividing total current assets by total current liabilities. Managers and lenders often want the current ratio to be 2.00 or greater. This ratio is often seen as an indication of short-term debt-paying ability. The higher the ratio, the more liquid the company.

•

Dividend Payout (% Earnings) - Total Dividends (%). The dividend payout ratio is generally used to measure the amount of current earnings per common share which are paid out in dividends. This ratio is generally determined by dividing dividends per common share by diluted earnings per share.

•

Fixed Charge Coverage Ratio. The fixed charge coverage ratio is generally seen as an indication of the company's ability to cover its fixed charges. This ratio is typically determined by dividing recurring earnings excluding interest expense, tax expense, equity earnings, and minority earnings plus interest from rentals by interest expense including capitalized interest and interest from rentals.

•

Gross Profit Margin (%). The gross profit margin is typically defined to equals the difference, in percent, between net sales revenue and the cost of goods sold.




75

•

Inventories (# of Days) Held. Inventory days held is generally determined by dividing the ending inventory by (the cost of goods held/365). The number of days held results in the average daily cost of goods held.

•

Inventory Turnover (%). Inventory turnover is used as a measure of the balance of inventory. It generally compares the amount of inventory with the total sales for the year. The ratio can reflect both on the quality of the inventory and the efficiency of management. Typically, the higher the turnover rate, the greater the likelihood that profits would be larger and less working capital bound up in inventory.

•

Net Margin (%). The net margin is the ratio of net income dollars generated by each dollar of sales.

•

Operating Profit Margin (%). Operating profit margin percent is the ratio of operating profit to net sales. Operating profit (loss) is income or loss before taxes calculated by the difference between total revenues and total expense disregarding the effects of any extraordinary transactions.

•

Quick Ratio. The quick ratio, also commonly known as the “acid test ratio”, is a refined current ratio and is often seen as a more conservative measure of liquidity. The quick ratio is generally determined by dividing cash and equivalents plus trade receivables by total current liabilities. The ratio shows the degree to which a company's current liabilities can be covered by the most liquid current assets. Financial management texts generally conclude that any value of less than 1 to 1 implies a reciprocal dependency on inventory or other current assets to liquidate short-term debt.

•

Reinvestment Rate - Total (%). The reinvestment rate is typically defined as the rate at which an investor assumes interest payments made on a debt security can be reinvested over the life of that security.

•

Return on Assets (%). Return on assets is generally used to measure a company's ability to use assets to create profit.

•

Return on Equity - Total (%). The return on total equity ratio is often seen to reflect the profitability of the company's operations after income taxes. Return on equity is often considered to be a good measure of the company's profitability. Tax laws and tax loss carryovers can affect the net income and therefore can also affect the return on equity.

•

Return on Invested Capital (%). The ratio of return on invested capital is typically defined as an evaluation of earnings performance without regard to the method of financing. This ratio measures the earnings on investment and is an indication of how well the company utilizes its asset base. Return on investment is a type of return on capital, therefore this ratio can be an indication of the company’s ability to reward investors who provide long-term funds and to attract future investors.

•

Tax Rate (%). The tax rate is typically defined as the average rate of domestic tax owed to government by the company.

•

Working Capital. Net working capital equals the difference between total current assets and total current liabilities. Working capital often reflects a company's ability to expand volume and meet obligations. Since growth is usually one goal, the amount of working capital on this year's balance sheet should be greater than that of the previous year's. This is an efficiency, or turnover, ratio which benchmarks the rate at which current assets less current liabilities are used by the company in making sales. A low ratio can indicate a less profitable use of working capital in making sales. On the other hand, a very high ratio can indicate the company is wasting current assets which could be more efficiently deployed in production and in increasing sales and profits; or that the company my be undercapitalized, and thus vulnerable to liquidity problems in a period of weak business conditions.




3.5.3

76

Ratio Structure: Outlook

Using the methodology described in the introduction, the following table summarizes ratio structure benchmarks for firms involved in electric services in Estonia. All figures are current-year projections for companies operating in Estonia based on latest financial results available. Ratios Estonia Europe World Avg. _________________________________________________________________________________________________________

Profitability Return on Equity - Total (%) Reinvestment Rate - Total (%) Return on Assets (%) Return on Invested Capital (%) Cash Earnings Return On Equity (%) Cash Flow % Sales Cost Goods Sold / Sales (%) Gross Profit Margin (%) Selling, General & Administrative Expense/Net Sales (%) Research & Development / Net Sales (%) Operating Profit Margin (%) Operating Inc / Total Capital (%) Pretax Margin (%) Tax Rate (%) Net Margin (%) Total Asset Turnover (X) th USD Asset Utilization Inventory Turnover (%) Net Sales % Working Capital Capital Expenditure % Gross Fixed Assets Capital Expenditure % Total Assets Capital Expenditure % Total Sales Accumulated Depreciation % Gross Fixed Assets Leverage Total Debt % Total Capital Long Term Debt % Total Capital Equity % Total Capital Fixed Charge Coverage Ratio Dividend Payout (% Earnings) - Total Dividends Fixed Assets % Common Equity Working Capital % Total Capital Liquidity Quick Ratio Current Ratio Inventories % Total Current Assets Accounts Receivables Days Inventories (# of Days) Held

9.26 6.19 4.99 6.96 21.82 9.96 79.05 11.98 4.73 0.11 6.73 10.60 6.23 29.97 4.10 1.20

15.62 9.27 6.99 11.24 35.32 19.58 64.69 21.70 9.67 0.59 11.40 10.31 14.74 45.21 11.10 0.62

14.68 9.23 13.41 11.19 -3271.90 25.99 55.52 26.33 5.23 0.21 20.28 -2656.26 19.38 27.45 13.55 0.60

36.45 31.80 10.22 7.67 9.05 26.83

60.43 6.11 7.07 7.01 14.26 39.47

66.26 13.53 7.32 7.27 17.64 31.85

34.65 24.05 71.74 14.30 34.02 123.72 -6.32

27.38 22.48 67.13 62.34 29.74 154.00 5.36

25.61 21.69 66.62 298.47 29.28 135.22 10.91

0.68 0.88 19.56 54.82 22.17

0.99 1.23 12.21 77.11 49.56

1.31 1.58 8.82 99.26 43.64

_________________________________________________________________________________________________________





3.5.4

77

Large Variances: Ratios

The following graphics summarize for electric services the large ratio structure gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Cash Earnings Return On Equity (%) 3271.9

4000 2000 21.82

0

35.32

-2000 -3250.08

-4000 Estonia

Europe

World Average

Gap

Gap: Cash Flow % Sales 25.99

30 20 10

19.58 9.96

0 -10 -16.03

-20 Estonia

Europe

World Average

Gap

Gap: Cost Goods Sold / Sales (%) 80

79.05 64.69

60

55.52

40

23.53

20 0 Estonia


Europe

World Average

Gap



78

Gap: Gross Profit Margin (%) 30 20

21.7

26.33

11.98

10 0 -10

-14.35

-20 Estonia

Europe

World Average

Gap

Gap: Operating Inc / Total Capital (%) 2656.26

3000 2000 1000

10.6

0

10.31

-1000 -2000

-2645.66

-3000 Estonia

Europe

World Average

Gap

Gap: Inventory Turnover (%) 80 60 40

60.43

66.26

36.45

20 0 -20

-29.81

-40 Estonia

Europe

World Average

Gap

Gap: Net Sales % Working Capital 40

31.8

30 20

13.53

18.27

6.11

10 0 Estonia


Europe

World Average

Gap



79

Gap: Fixed Charge Coverage Ratio 298.47

300 200 100

14.3

62.34

0 -100 -200 -284.17 Gap

-300 Estonia

Europe

World Average

Gap: Working Capital % Total Capital 15 10

10.91 6.32

5.36

Estonia

Europe

5 0 -4.59 Gap

-5 World Average

Gap: Accounts Receivables Days 99.26

100

77.11 54.82

50 0 -44.44

-50 Estonia

Europe

World Average

Gap

Gap: Inventories (# of Days) Held 49.56

60 40

43.64

22.17

20 0 -20

-21.47

-40 Estonia


Europe

World Average

Gap



3.5.5

80


We now consider the distribution of financial ratios for electric services using ranks and percentiles. What percent of countries have a value lower or higher than Estonia (what is the ratio's rank or percentile)? The table below answers this question with respect to financial ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key financial ratios are highlighted in additional tables. Ratios

Estonia

Rank of Total

Percentile

9.26 6.19 4.99 6.96 21.82 9.96 79.05 11.98 4.73 0.11 6.73 10.60 6.23 29.97 4.10 1.20

31 of 53 21 of 53 37 of 53 30 of 53 34 of 53 49 of 54 9 of 53 47 of 53 32 of 37 20 of 20 45 of 54 22 of 53 45 of 54 18 of 53 48 of 54 4 of 54

41.51 60.38 30.19 43.40 35.85 9.26 83.02 11.32 13.51 0.00 16.67 58.49 16.67 66.04 11.11 92.59

36.45 31.80 10.22 7.67 9.05 26.83

27 of 53 6 of 54 13 of 52 19 of 54 37 of 54 35 of 52

49.06 88.89 75.00 64.81 31.48 32.69

34.65 24.05 71.74 14.30 34.02 123.72 -6.32

27 of 54 34 of 53 18 of 54 26 of 54 24 of 44 32 of 54 45 of 54

50.00 35.85 66.67 51.85 45.45 40.74 16.67

0.68 0.88 19.56 54.82 22.17

46 of 54 46 of 54 9 of 54 42 of 53 39 of 53

14.81 14.81 83.33 20.75 26.42

_________________________________________________________________________________________________________

Profitability Return on Equity - Total (%) Reinvestment Rate - Total (%) Return on Assets (%) Return on Invested Capital (%) Cash Earnings Return On Equity (%) Cash Flow % Sales Cost Goods Sold / Sales (%) Gross Profit Margin (%) Selling, General & Administrative Expense/Net Sales (%) Research & Development / Net Sales (%) Operating Profit Margin (%) Operating Inc / Total Capital (%) Pretax Margin (%) Tax Rate (%) Net Margin (%) Total Asset Turnover (X) th USD Asset Utilization Inventory Turnover (%) Net Sales % Working Capital Capital Expenditure % Gross Fixed Assets Capital Expenditure % Total Assets Capital Expenditure % Total Sales Accumulated Depreciation % Gross Fixed Assets Leverage Total Debt % Total Capital Long Term Debt % Total Capital Equity % Total Capital Fixed Charge Coverage Ratio Dividend Payout (% Earnings) - Total Dividends Fixed Assets % Common Equity Working Capital % Total Capital Liquidity Quick Ratio Current Ratio Inventories % Total Current Assets Accounts Receivables Days Inventories (# of Days) Held

_________________________________________________________________________________________________________





81

Gross Profit Margin (%) Countries

Value

Rank

Percentile

Greece Australia Thailand Philippines Malaysia Hong Kong Norway Peru Argentina USA Italy Chile the United Kingdom Indonesia China Brazil Turkey Singapore Mexico Canada Pakistan Switzerland Japan New Zealand Sweden Finland Spain Luxembourg France India Russian Federation Austria Israel Ireland Germany Czech Republic Taiwan South Korea Portugal Denmark Belgium Poland Hungary Netherlands

47.10 45.91 45.74 44.07 41.23 39.98 38.52 37.41 37.34 36.00 35.49 35.41 35.02 34.84 34.01 33.79 32.63 32.60 32.54 31.97 31.51 27.98 26.20 24.96 24.22 22.80 22.80 21.70 20.75 20.03 17.92 17.30 16.34 16.20 13.83 12.78 12.75 12.42 11.64 11.08 7.84 7.62 6.30 1.32

1 2 3 4 6 7 8 10 12 13 14 15 17 18 19 20 22 23 24 25 26 28 30 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

98.08 96.15 94.23 92.31 88.46 86.54 84.62 80.77 76.92 75.00 73.08 71.15 67.31 65.38 63.46 61.54 57.69 55.77 53.85 51.92 50.00 46.15 42.31 38.46 36.54 34.62 32.69 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 15.38 13.46 11.54 9.62 7.69 5.77 3.85 1.92 0.00

Region

_________________________________________________________________________________________________________

Europe Oceana Asia Asia Asia Asia Europe Latin America Latin America North America Europe Latin America Europe Asia Asia Latin America the Middle East Asia Latin America North America the Middle East Europe Asia Oceana Europe Europe Europe Europe Europe Asia Europe Europe the Middle East Europe Europe Europe Asia Asia Europe Europe Europe Europe Europe Europe

_________________________________________________________________________________________________________





82

Gross Profit Margin (%) (Electric Services) Countries in Europe

Value

Rank

Percentile

Greece Malta Isle of Man Belarus Slovakia Norway Faroe Islands Iceland Vatican City Italy the United Kingdom Albania Monaco Romania Bosnia & Herzegovina Switzerland Macedonia Serbia & Montenegro Liechtenstein Andorra Sweden Finland Spain Luxembourg Slovenia France Russian Federation Lithuania Austria San Marino Guernsey Jersey Ireland Germany Czech Republic Latvia Croatia Estonia Portugal Cyprus Denmark Belgium Poland Moldova Kazakhstan Bulgaria Hungary Ukraine Gibraltar Georgia Netherlands

47.10 43.65 43.08 42.95 42.85 38.52 38.34 36.37 35.78 35.49 35.02 32.66 31.61 31.00 28.45 27.98 27.65 26.67 26.11 25.85 24.22 22.80 22.80 21.70 21.40 20.75 17.92 17.88 17.30 17.14 16.71 16.71 16.20 13.83 12.78 12.13 12.12 11.98 11.64 11.15 11.08 7.84 7.62 6.85 6.59 6.58 6.30 5.66 5.39 5.30 1.32

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________




83

Pretax Margin (%) Countries

Value

Rank

Percentile

Greece New Zealand Philippines Hong Kong Malaysia Indonesia Turkey Mexico China Thailand Peru Luxembourg Pakistan Argentina India Chile Switzerland Australia Spain the United Kingdom Italy South Africa Singapore Canada Sweden Russian Federation Taiwan USA Germany Brazil Finland Czech Republic Austria Belgium France South Korea Japan Denmark Hungary Portugal Netherlands Norway Israel Ireland Poland

58.88 51.62 35.41 34.75 32.00 28.00 26.61 26.54 25.58 25.12 24.71 23.67 23.12 22.61 21.79 19.77 17.20 17.02 15.96 15.93 15.21 14.04 13.40 13.30 12.96 11.35 11.20 11.09 10.56 10.31 9.54 9.46 9.06 8.09 6.52 6.47 5.43 5.42 5.17 4.49 2.96 2.60 1.66 1.65 -2.36

1 2 3 4 5 7 9 10 12 13 14 16 17 18 19 22 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53

98.11 96.23 94.34 92.45 90.57 86.79 83.02 81.13 77.36 75.47 73.58 69.81 67.92 66.04 64.15 58.49 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Europe Oceana Asia Asia Asia Asia the Middle East Latin America Asia Asia Latin America Europe the Middle East Latin America Asia Latin America Europe Oceana Europe Europe Europe Africa Asia North America Europe Europe Asia North America Europe Latin America Europe Europe Europe Europe Europe Asia Asia Europe Europe Europe Europe Europe the Middle East Europe Europe

_________________________________________________________________________________________________________





84

Pretax Margin (%) (Electric Services) Countries in Europe

Value

Rank

Percentile

Greece Malta Isle of Man Andorra Faroe Islands Belarus Slovakia Romania Luxembourg Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania Switzerland Liechtenstein Spain the United Kingdom Vatican City Italy Slovenia Monaco Sweden Russian Federation Lithuania Iceland Germany Finland Czech Republic Austria Latvia Croatia San Marino Jersey Guernsey Belgium France Estonia Denmark Hungary Ukraine Portugal Gibraltar Georgia Cyprus Netherlands Norway Ireland Bulgaria Kazakhstan Moldova Poland

58.88 54.57 53.85 53.46 33.32 26.87 26.81 25.28 23.67 23.20 22.55 21.75 21.57 17.20 16.05 15.96 15.93 15.34 15.21 14.98 13.00 12.96 11.35 11.32 11.21 10.56 9.54 9.46 9.06 8.98 8.97 8.97 8.75 8.75 8.09 6.52 6.23 5.42 5.17 4.65 4.49 4.42 4.35 4.30 2.96 2.60 1.65 -2.04 -2.04 -2.12 -2.36

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________




85

Quick Ratio Countries

Value

Rank

Percentile

3.30 2.49 2.31 2.22 1.98 1.93 1.90 1.89 1.83 1.61 1.47 1.44 1.44 1.33 1.23 1.23 1.17 1.16 1.11 1.09 1.07 1.00 0.99 0.99 0.98 0.98 0.97 0.96 0.94 0.92 0.90 0.87 0.82 0.78 0.71 0.71 0.70 0.69 0.66 0.64 0.64 0.50 0.49 0.48 0.36

1 4 5 6 7 9 10 11 12 15 16 17 18 19 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 42 43 44 45 46 47 48 50 51 52 53

98.11 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 71.70 69.81 67.92 66.04 64.15 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 20.75 18.87 16.98 15.09 13.21 11.32 9.43 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Thailand Germany Philippines Malaysia Switzerland Singapore Turkey Mexico Indonesia Brazil Canada India China Poland Belgium Russian Federation Pakistan France Norway New Zealand South Africa Greece Denmark Israel Hong Kong Ireland Finland Italy Spain Chile Luxembourg the United Kingdom Sweden Argentina South Korea Australia Taiwan Peru USA Netherlands Czech Republic Austria Hungary Portugal Japan

Asia Europe Asia Asia Europe Asia the Middle East Latin America Asia Latin America North America Asia Asia Europe Europe Europe the Middle East Europe Europe Oceana Africa Europe Europe the Middle East Asia Europe Europe Europe Europe Latin America Europe Europe Europe Latin America Asia Oceana Asia Latin America North America Europe Europe Europe Europe Europe Asia

_________________________________________________________________________________________________________





86

Quick Ratio (Electric Services) Countries in Europe

Value

Rank

Percentile

2.49 1.98 1.87 1.85 1.80 1.66 1.61 1.55 1.33 1.23 1.23 1.22 1.20 1.16 1.15 1.15 1.13 1.11 1.00 0.99 0.98 0.97 0.97 0.96 0.94 0.94 0.93 0.92 0.90 0.88 0.87 0.82 0.72 0.72 0.68 0.67 0.64 0.64 0.61 0.60 0.60 0.50 0.49 0.49 0.48 0.48 0.48 0.46 0.44 0.42 0.41

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Germany Switzerland Monaco Liechtenstein Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Poland Belgium Russian Federation Lithuania Moldova France Kazakhstan Bulgaria Andorra Norway Greece Denmark Ireland Finland Vatican City Italy Faroe Islands Spain Malta Isle of Man Luxembourg Slovenia the United Kingdom Sweden Belarus Slovakia Estonia Iceland Netherlands Czech Republic Albania Latvia Croatia Austria San Marino Hungary Guernsey Jersey Portugal Cyprus Ukraine Gibraltar Georgia

_________________________________________________________________________________________________________




87

Current Ratio Countries

Value

Rank

Percentile

3.65 3.13 3.05 2.48 2.47 2.37 2.23 2.10 2.09 1.85 1.84 1.83 1.77 1.69 1.56 1.55 1.54 1.53 1.49 1.42 1.38 1.36 1.36 1.33 1.27 1.20 1.16 1.11 1.10 1.06 1.05 1.04 1.02 0.98 0.98 0.96 0.96 0.91 0.81 0.80 0.69 0.64 0.63 0.59 0.52

1 2 3 7 8 9 11 12 13 15 16 17 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 45 46 47 48 49 50 52 53

98.11 96.23 94.34 86.79 84.91 83.02 79.25 77.36 75.47 71.70 69.81 67.92 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Thailand Philippines Germany Switzerland Indonesia Malaysia Singapore Turkey Mexico Israel India Ireland Canada Brazil Greece China Poland Belgium Russian Federation Finland Pakistan Norway France Hong Kong Sweden South Africa New Zealand Denmark Italy the United Kingdom Chile Taiwan Spain Czech Republic Luxembourg USA Australia South Korea Argentina Peru Netherlands Hungary Portugal Austria Japan

Asia Asia Europe Europe Asia Asia Asia the Middle East Latin America the Middle East Asia Europe North America Latin America Europe Asia Europe Europe Europe Europe the Middle East Europe Europe Asia Europe Africa Oceana Europe Europe Europe Latin America Asia Europe Europe Europe North America Oceana Asia Latin America Latin America Europe Europe Europe Europe Asia

_________________________________________________________________________________________________________





88

Current Ratio (Electric Services) Countries in Europe

Value

Rank

Percentile

3.05 2.48 2.32 2.16 1.99 1.83 1.83 1.78 1.71 1.56 1.54 1.53 1.49 1.49 1.44 1.42 1.42 1.38 1.36 1.36 1.33 1.33 1.28 1.27 1.20 1.11 1.11 1.10 1.06 1.02 0.98 0.98 0.97 0.96 0.93 0.93 0.92 0.92 0.88 0.69 0.69 0.64 0.63 0.60 0.59 0.58 0.58 0.57 0.57 0.55 0.54

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Germany Switzerland Liechtenstein Monaco Romania Ireland Bosnia & Herzegovina Macedonia Serbia & Montenegro Greece Poland Belgium Russian Federation Lithuania Malta Isle of Man Finland Moldova Norway France Kazakhstan Bulgaria Faroe Islands Sweden Andorra Vatican City Denmark Italy the United Kingdom Spain Czech Republic Luxembourg Iceland Slovenia Latvia Croatia Belarus Slovakia Estonia Albania Netherlands Hungary Portugal Cyprus Austria San Marino Ukraine Guernsey Jersey Gibraltar Georgia

_________________________________________________________________________________________________________




89

Inventories % Total Current Assets Countries

Value

Rank

Percentile

Israel Ireland Greece Canada Sweden Taiwan Denmark South Korea Japan Finland USA Belgium Russian Federation Poland Singapore Norway Italy Thailand Pakistan Peru Spain France Austria Germany South Africa Philippines India Switzerland Malaysia Hungary Australia Czech Republic China Luxembourg the United Kingdom Hong Kong Portugal Indonesia Netherlands Chile Brazil Turkey Mexico Argentina New Zealand

44.64 44.27 27.85 25.17 23.85 23.76 22.74 20.29 18.29 17.40 17.06 16.65 16.27 15.45 14.61 14.42 12.49 11.21 11.17 11.05 10.69 10.64 9.21 9.15 9.07 9.04 8.24 8.18 8.03 7.78 7.74 7.64 7.63 7.60 7.47 7.38 7.16 7.15 6.84 4.67 2.81 1.60 1.59 0.88 0.35

1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 26 27 28 30 31 33 34 35 37 38 39 40 41 42 43 44 47 48 49 50 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 52.83 50.94 49.06 47.17 43.40 41.51 37.74 35.85 33.96 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

the Middle East Europe Europe North America Europe Asia Europe Asia Asia Europe North America Europe Europe Europe Asia Europe Europe Asia the Middle East Latin America Europe Europe Europe Europe Africa Asia Asia Europe Asia Europe Oceana Europe Asia Europe Europe Asia Europe Asia Europe Latin America Latin America the Middle East Latin America Latin America Oceana

_________________________________________________________________________________________________________





90

Inventories % Total Current Assets (Electric Services) Countries in Europe

Value

Rank

Percentile

Ireland Greece Malta Isle of Man Sweden Denmark Estonia Belarus Slovakia Finland Iceland Belgium Russian Federation Lithuania Poland Norway Monaco Moldova Kazakhstan Bulgaria Vatican City Italy Spain France Slovenia Albania Austria Germany San Marino Guernsey Jersey Switzerland Hungary Czech Republic Liechtenstein Luxembourg the United Kingdom Latvia Croatia Portugal Faroe Islands Ukraine Cyprus Netherlands Gibraltar Georgia Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Andorra

44.27 27.85 25.81 25.47 23.85 22.74 19.56 19.27 19.23 17.40 17.23 16.65 16.27 16.23 15.45 14.42 14.16 13.89 13.37 13.35 12.59 12.49 10.69 10.64 10.04 9.65 9.21 9.15 9.12 8.90 8.90 8.18 7.78 7.64 7.64 7.60 7.47 7.26 7.25 7.16 7.08 7.00 6.85 6.84 6.65 6.55 1.52 1.39 1.35 1.31 0.37

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________




91

Accounts Receivables Days Countries

Value

Rank

Percentile

Philippines Indonesia Italy Greece Russian Federation India Malaysia Brazil France Switzerland Singapore Spain Pakistan Luxembourg Canada Germany Chile Israel Poland Ireland Norway Finland Denmark Portugal Australia Sweden Argentina South Africa Turkey Mexico Belgium Netherlands Thailand China Peru the United Kingdom South Korea USA Taiwan Hong Kong Austria Japan Hungary Czech Republic

256.48 202.80 165.75 158.84 147.40 144.73 134.24 132.36 130.07 105.13 101.38 96.72 91.38 90.26 88.42 87.61 85.56 84.36 84.30 83.66 82.49 79.28 76.21 75.41 73.87 72.08 66.96 66.73 65.39 65.21 64.81 60.11 59.68 59.25 58.03 56.93 56.86 53.19 50.84 49.71 44.25 42.04 41.00 33.43

1 3 5 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 36 37 38 39 40 41 42 43 45 48 50 51 52

98.08 94.23 90.38 88.46 86.54 82.69 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 44.23 42.31 40.38 38.46 36.54 34.62 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 13.46 7.69 3.85 1.92 0.00

Region

_________________________________________________________________________________________________________

Asia Asia Europe Europe Europe Asia Asia Latin America Europe Europe Asia Europe the Middle East Europe North America Europe Latin America the Middle East Europe Europe Europe Europe Europe Europe Oceana Europe Latin America Africa the Middle East Latin America Europe Europe Asia Asia Latin America Europe Asia North America Asia Asia Europe Asia Europe Europe

_________________________________________________________________________________________________________





92

Accounts Receivables Days (Electric Services) Countries in Europe

Value

Rank

Percentile

Vatican City Italy Greece Russian Federation Malta Lithuania Isle of Man France Switzerland Monaco Liechtenstein Spain Slovenia Luxembourg Germany Poland Ireland Norway Finland Denmark Moldova Portugal Kazakhstan Bulgaria Cyprus Sweden Belgium Romania Netherlands Bosnia & Herzegovina the United Kingdom Macedonia Estonia Iceland Serbia & Montenegro Albania Belarus Slovakia Faroe Islands Austria San Marino Guernsey Jersey Hungary Ukraine Gibraltar Georgia Czech Republic Latvia Croatia

167.09 165.75 158.84 147.40 147.21 147.05 145.28 130.07 105.13 98.31 98.10 96.72 90.80 90.26 87.61 84.30 83.66 82.49 79.28 76.21 75.80 75.41 72.94 72.81 72.19 72.08 64.81 62.13 60.11 57.01 56.93 55.41 54.82 53.74 53.45 50.65 49.16 49.05 47.67 44.25 43.83 42.73 42.73 41.00 36.87 35.06 34.52 33.43 31.73 31.71

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

98.00 96.00 94.00 92.00 90.00 88.00 86.00 84.00 82.00 80.00 78.00 76.00 74.00 72.00 70.00 68.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 50.00 48.00 46.00 44.00 42.00 40.00 38.00 36.00 34.00 32.00 30.00 28.00 26.00 24.00 22.00 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________





93

Inventories (# of Days) Held Countries

Value

Rank

Percentile

Greece Thailand Finland Switzerland Israel Ireland Philippines Sweden Indonesia Norway India Pakistan Singapore Malaysia Italy Canada USA Taiwan Hong Kong Poland Belgium France Peru Australia Russian Federation Japan China Denmark Spain South Korea Germany the United Kingdom Luxembourg South Africa Czech Republic Austria Brazil Portugal Chile Netherlands Hungary Turkey Mexico Argentina

317.16 194.42 142.15 106.57 101.78 100.94 96.07 77.54 75.96 67.56 65.06 60.63 57.86 54.42 49.88 48.92 39.01 38.89 37.99 35.61 33.06 32.44 31.53 31.33 29.54 28.75 26.48 25.40 23.28 22.99 22.28 18.70 17.24 16.53 15.17 13.62 12.98 9.68 8.46 6.97 5.40 4.62 4.61 1.15

1 2 5 6 7 8 9 12 13 15 16 17 18 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 52

98.08 96.15 90.38 88.46 86.54 84.62 82.69 76.92 75.00 71.15 69.23 67.31 65.38 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 44.23 42.31 40.38 38.46 36.54 34.62 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 15.38 13.46 11.54 9.62 7.69 5.77 3.85 0.00

Region

_________________________________________________________________________________________________________

Europe Asia Europe Europe the Middle East Europe Asia Europe Asia Europe Asia the Middle East Asia Asia Europe North America North America Asia Asia Europe Europe Europe Latin America Oceana Europe Asia Asia Europe Europe Asia Europe Europe Europe Africa Europe Europe Latin America Europe Latin America Europe Europe the Middle East Latin America Latin America

_________________________________________________________________________________________________________





94

Inventories (# of Days) Held (Electric Services) Countries in Europe

Value

Rank

Percentile

Greece Malta Isle of Man Finland Switzerland Ireland Liechtenstein Belarus Slovakia Sweden Norway Monaco Vatican City Italy Iceland Faroe Islands Poland Belgium France Moldova Kazakhstan Bulgaria Russian Federation Lithuania Albania Denmark Spain Germany Estonia Slovenia the United Kingdom Luxembourg Czech Republic Latvia Croatia Austria San Marino Jersey Guernsey Portugal Cyprus Netherlands Hungary Ukraine Gibraltar Georgia Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro

317.16 293.95 290.08 142.15 106.57 100.94 99.44 79.74 79.56 77.54 67.56 56.11 50.28 49.88 39.41 36.42 35.61 33.06 32.44 32.01 30.81 30.75 29.54 29.47 27.52 25.40 23.28 22.28 22.17 21.85 18.70 17.24 15.17 14.40 14.39 13.62 13.49 13.15 13.15 9.68 9.27 6.97 5.40 4.86 4.62 4.55 4.39 4.03 3.91 3.78

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

98.00 96.00 94.00 92.00 90.00 88.00 86.00 84.00 82.00 80.00 78.00 76.00 74.00 72.00 70.00 68.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 50.00 48.00 46.00 44.00 42.00 40.00 38.00 36.00 34.00 32.00 30.00 28.00 26.00 24.00 22.00 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________





3.6 3.6.1

95

PRODUCTIVITY IN ESTONIA: ASSET-LABOR RATIOS Overview

In this chapter, we consider numerous asset-labor ratios for electric services in Estonia benchmarked against global averages. Productivity and utilization ratios are presented for companies oprating in Estonia and the average global benchmarks for electric services. For ratios where there are large deviations between Estonia and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain asset-labor ratios are highlighted across countries in the comparison group. In the case of asset-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. We then report the larger asset-labor ratio gaps for electric services that Estonia has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.




3.6.2

96

Asset to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for electric services in Estonia based on latest financial results available. Labor-asset Ratios ($k/employee) Estonia Europe World Avg. _________________________________________________________________________________________________________


90.90 61.99 18.52 320.85 132.30 19.01 1.87 88.61 60.81 1.87 11.03 556.78 62.25 28.55 51.68 977.09 1330.01 179.88 83.45 399.91 3.23 816.33 352.92 11.45 172.47 1.93 222.04 45.03 0.23 11.48 12.70 1705.83

71.44 40.09 20.74 110.78 24.22 6.80 7.37 3.42 4.24 5.04 10.98 219.14 26.42 67.58 32.53 478.62 914.78 24.26 209.63 544.04 48.51 215.76 418.92 83.92 306.65 31.54 97.23 90.51 4.94 4.21 42.33 875.73

95.27 33.68 45.45 118.83 18.31 4.40 1.44 3.48 10.36 3.26 19.77 253.88 4.31 39.05 17.28 776.49 1221.51 24.35 120.53 421.47 5.40 160.36 375.31 20.18 131.11 3.62 34.41 127.96 8.38 23.99 30.38 1204.34

_________________________________________________________________________________________________________





3.6.3

97

Asset to Labor: International Gaps

The following graphics summarize for electric services the large labor-asset gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Receivables (Net) ($k/employee) 400

320.85

300 202.02

200

110.78

118.83

100 0 Estonia

Europe

World Average

Gap

Gap: Total Inventories ($k/employee) 150

132.3 113.99

100 50

24.22

18.31

0 Estonia

Europe

World Average

Gap

Gap: Finished Goods ($k/employee) 100

88.61

85.13

80 60 40 20

3.42

3.48

0 Estonia


Europe

World Average

Gap



98

Gap: Current Assets - Total ($k/employee) 600

556.78

500 400 300

219.14

253.88

302.9

200 100 0 Estonia

Europe

World Average

Gap

Gap: Property Plant and Equipment - Net ($k/employee) 1000

977.09 776.49

800 600

478.62

400

200.6

200 0 Estonia

Europe

World Average

Gap

Gap: Property Plant and Equipment - Gross ($k/employee) 1500

1330.01

1221.51 914.78

1000 500

108.5 0 Estonia

Europe

World Average

Gap

Gap: Land ($k/employee) 200

179.88

155.53

150 100 50

24.26

24.35

0 Estonia


Europe

World Average

Gap



99

Gap: Other Property Plant & Equipment ($k/employee) 1000

816.33

800

655.97

600 400

215.76

200

160.36

0 Estonia

Europe

World Average

Gap

Gap: Accumulated Depreciation - Other Prop & Equip ($k/employee) 250

222.04 187.63

200 150

97.23

100

34.41

50 0 Estonia

Europe

World Average

Gap

Gap: Other Assets ($k/employee) 127.96

150 100 50

90.51 45.03

0 -50 -82.93

-100 Estonia

Europe

World Average

Gap

Gap: Total Assets ($k/employee) 2000

1705.83

1500

1204.34 875.73

1000

501.49

500 0 Estonia


Europe

World Average

Gap



3.6.4

100


We now consider the distribution of asset-labor ratios using ranks and percentiles across . What percent of countries have a productivity indicator lower or higher than Estonia (what is the indicator's rank or percentile)? The table below answers this question with respect to asset-labor structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key asset-labor ratios are highlighted in additional tables. Asset Structure ($k/employee)

Estonia

Rank of Total

Percentile


90.90 61.99 18.52 320.85 132.30 19.01 1.87 88.61 60.81 1.87 11.03 556.78 62.25 28.55 51.68 977.09 1330.01 179.88 83.45 399.91 3.23 816.33 352.92 11.45 172.47 1.93 222.04 45.03 0.23 11.48 12.70 1705.83

19 of 54 8 of 51 27 of 49 5 of 54 3 of 54 5 of 47 17 of 34 2 of 35 3 of 44 24 of 35 22 of 53 6 of 54 4 of 43 29 of 47 6 of 47 14 of 54 21 of 52 3 of 40 25 of 49 25 of 51 26 of 36 4 of 52 20 of 52 37 of 46 21 of 47 24 of 33 7 of 49 33 of 54 31 of 34 14 of 36 30 of 52 12 of 54

64.81 84.31 44.90 90.74 94.44 89.36 50.00 94.29 93.18 31.43 58.49 88.89 90.70 38.30 87.23 74.07 59.62 92.50 48.98 50.98 27.78 92.31 61.54 19.57 55.32 27.27 85.71 38.89 8.82 61.11 42.31 77.78

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________





101

Cash & Short Term Investments Countries

Value ($K/employee)

Rank

Percentile

777.76 663.64 344.99 281.92 252.20 183.95 183.45 179.21 162.64 135.94 134.14 123.93 94.29 94.29 93.70 83.07 74.09 71.71 67.95 65.67 61.86 60.69 56.30 56.01 45.36 44.52 41.11 38.61 35.72 33.58 24.05 23.84 22.84 22.33 21.80 18.19 14.12 12.87 12.05 11.91 8.95 8.87 4.07 3.49 0.74

1 2 3 5 7 8 9 10 12 13 14 15 16 17 18 19 21 22 24 25 26 27 28 29 31 32 33 34 35 36 38 39 40 41 42 43 44 45 46 47 48 49 51 52 53

98.11 96.23 94.34 90.57 86.79 84.91 83.02 81.13 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 60.38 58.49 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Belgium Pakistan Thailand Malaysia Switzerland Turkey Mexico USA China Canada Germany Australia South Korea New Zealand Philippines Netherlands Indonesia Hong Kong Denmark Luxembourg the United Kingdom Austria Argentina Spain Peru Norway Italy Sweden France Finland Japan Poland Czech Republic Brazil South Africa Chile Greece Taiwan Portugal Singapore Israel Ireland India Hungary Russian Federation

Europe the Middle East Asia Asia Europe the Middle East Latin America North America Asia North America Europe Oceana Asia Oceana Asia Europe Asia Asia Europe Europe Europe Europe Latin America Europe Latin America Europe Europe Europe Europe Europe Asia Europe Europe Latin America Africa Latin America Europe Asia Europe Asia the Middle East Europe Asia Europe Europe

_________________________________________________________________________________________________________





102

Cash & Short Term Investments (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

777.76 252.20 235.34 181.05 174.78 160.39 155.88 150.37 134.14 97.64 90.90 83.07 68.76 67.95 65.67 61.86 60.69 60.11 58.61 58.61 56.01 52.58 44.52 41.44 41.11 39.59 38.61 35.72 33.58 23.84 22.84 21.68 21.67 21.44 20.63 20.59 14.12 13.08 12.91 12.05 11.55 11.53 8.87 6.89 6.87 3.49 3.14 2.98 2.94 0.74 0.74

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Switzerland Liechtenstein Iceland Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Germany Andorra Estonia Netherlands Faroe Islands Denmark Luxembourg the United Kingdom Austria San Marino Guernsey Jersey Spain Slovenia Norway Vatican City Italy Albania Sweden France Finland Poland Czech Republic Latvia Croatia Moldova Kazakhstan Bulgaria Greece Malta Isle of Man Portugal Monaco Cyprus Ireland Belarus Slovakia Hungary Ukraine Gibraltar Georgia Russian Federation Lithuania

_________________________________________________________________________________________________________




103

Receivables (Net) Countries

Value ($K/employee)

Rank

Percentile

1060.13 557.76 337.58 332.82 292.45 238.84 216.06 199.14 173.10 165.60 144.60 143.94 131.72 116.94 116.62 114.33 113.93 111.28 110.04 109.74 103.66 102.26 96.24 87.59 85.84 80.76 71.33 69.46 64.32 61.88 61.83 57.31 55.59 49.89 46.91 44.71 44.34 27.61 26.82 26.38 23.86 23.84 16.94 10.95 8.03

1 2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 18 19 20 21 23 24 27 29 30 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 71.70 69.81 67.92 66.04 64.15 62.26 60.38 56.60 54.72 49.06 45.28 43.40 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Belgium Netherlands Pakistan South Korea Switzerland China Australia Italy Germany USA Philippines Spain New Zealand Thailand Malaysia Indonesia Canada Peru Turkey Mexico France Denmark Sweden Argentina the United Kingdom Portugal Norway Chile Luxembourg Hong Kong Finland Brazil Austria Poland Japan Israel Ireland Singapore India Greece Taiwan Hungary Czech Republic South Africa Russian Federation

Europe Europe the Middle East Asia Europe Asia Oceana Europe Europe North America Asia Europe Oceana Asia Asia Asia North America Latin America the Middle East Latin America Europe Europe Europe Latin America Europe Europe Europe Latin America Europe Asia Europe Latin America Europe Europe Asia the Middle East Europe Asia Asia Europe Asia Europe Europe Africa Europe

_________________________________________________________________________________________________________





104

Receivables (Net) (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

1060.13 557.76 320.85 292.45 272.89 200.75 199.14 173.10 167.30 143.94 136.41 135.13 104.55 103.66 102.26 97.14 96.24 95.95 93.25 89.95 85.84 80.76 77.30 71.33 64.32 61.83 59.34 55.59 55.06 53.68 53.68 49.89 44.86 44.34 43.17 43.09 26.77 26.38 24.45 24.13 23.84 21.44 20.39 20.07 16.94 16.08 16.07 8.03 8.01 5.02 5.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Netherlands Estonia Switzerland Liechtenstein Vatican City Italy Germany Iceland Spain Andorra Slovenia Romania France Denmark Albania Sweden Bosnia & Herzegovina Macedonia Serbia & Montenegro the United Kingdom Portugal Cyprus Norway Luxembourg Finland Faroe Islands Austria San Marino Guernsey Jersey Poland Moldova Ireland Kazakhstan Bulgaria Monaco Greece Malta Isle of Man Hungary Ukraine Gibraltar Georgia Czech Republic Latvia Croatia Russian Federation Lithuania Belarus Slovakia

_________________________________________________________________________________________________________




105

Total Inventories Countries

Value ($K/employee)

Rank

Percentile

334.42 137.23 123.90 75.51 68.38 58.96 55.16 44.39 44.02 38.64 35.43 31.81 26.91 24.11 21.21 20.29 19.72 19.06 18.74 17.54 17.49 15.87 14.43 14.24 12.96 12.42 12.35 11.76 11.33 10.69 9.56 8.65 8.02 6.18 4.86 4.65 4.64 3.73 3.03 2.93 2.55 1.81 1.62 1.31 0.85

1 2 3 4 5 6 7 9 10 12 13 14 15 16 17 19 20 21 22 24 25 26 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 45 46 47 49 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 81.13 77.36 75.47 73.58 71.70 69.81 67.92 64.15 62.26 60.38 58.49 54.72 52.83 50.94 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 15.09 13.21 11.32 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Belgium South Korea Pakistan Finland Sweden Italy Thailand Israel Ireland Switzerland Malaysia Canada USA Philippines Japan Spain Peru Indonesia Germany Greece France China Hong Kong Netherlands Taiwan Luxembourg Austria Denmark Norway Singapore the United Kingdom Portugal Australia Poland South Africa Turkey Mexico Czech Republic India Chile Hungary Russian Federation Brazil Argentina New Zealand

Europe Asia the Middle East Europe Europe Europe Asia the Middle East Europe Europe Asia North America North America Asia Asia Europe Latin America Asia Europe Europe Europe Asia Asia Europe Asia Europe Europe Europe Europe Asia Europe Europe Oceana Europe Africa the Middle East Latin America Europe Asia Latin America Europe Europe Latin America Latin America Oceana

_________________________________________________________________________________________________________





106

Total Inventories (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

334.42 132.30 75.51 68.38 59.44 58.96 44.02 38.64 36.06 27.18 20.29 19.05 18.74 17.54 17.49 17.21 16.26 16.05 14.24 13.84 12.42 12.35 12.24 11.93 11.93 11.76 11.33 10.37 9.56 8.65 8.28 6.18 5.56 5.35 5.34 4.42 4.06 3.94 3.80 3.73 3.54 3.54 2.91 2.91 2.55 2.29 2.18 2.14 1.81 1.80 0.88

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Estonia Finland Sweden Vatican City Italy Ireland Switzerland Liechtenstein Iceland Spain Slovenia Germany Greece France Albania Malta Isle of Man Netherlands Faroe Islands Luxembourg Austria San Marino Jersey Guernsey Denmark Norway Monaco the United Kingdom Portugal Cyprus Poland Moldova Kazakhstan Bulgaria Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Czech Republic Latvia Croatia Belarus Slovakia Hungary Ukraine Gibraltar Georgia Russian Federation Lithuania Andorra

_________________________________________________________________________________________________________




107

Current Assets - Total Countries

Value ($K/employee)

Rank

Percentile

2176.38 1273.34 661.20 601.37 577.55 531.09 489.37 437.73 418.41 376.09 374.93 350.69 318.98 318.11 310.26 301.47 277.29 239.21 230.69 223.12 218.85 183.40 181.89 179.60 168.35 161.30 149.24 144.53 142.44 133.36 120.79 104.63 100.27 99.44 98.89 82.78 81.28 69.00 63.00 54.55 51.86 40.23 37.79 33.71 10.78

1 2 3 4 5 6 7 9 10 12 13 14 15 16 17 18 21 23 24 25 26 28 29 30 31 32 33 34 35 36 38 39 40 41 42 43 44 45 46 47 48 49 50 51 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 81.13 77.36 75.47 73.58 71.70 69.81 67.92 66.04 60.38 56.60 54.72 52.83 50.94 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 0.00

Region

_________________________________________________________________________________________________________

Belgium Pakistan Netherlands Switzerland South Korea Thailand USA Malaysia China Germany Australia Philippines Turkey Mexico Italy Canada Indonesia New Zealand Finland Sweden Spain Denmark the United Kingdom Peru Hong Kong France Argentina Norway Luxembourg Austria Portugal Japan Israel Ireland Chile Brazil Poland Czech Republic Greece Taiwan Singapore India South Africa Hungary Russian Federation

Europe the Middle East Europe Europe Asia Asia North America Asia Asia Europe Oceana Asia the Middle East Latin America Europe North America Asia Oceana Europe Europe Europe Europe Europe Latin America Asia Europe Latin America Europe Europe Europe Europe Asia the Middle East Europe Latin America Latin America Europe Europe Europe Asia Asia Asia Africa Europe Europe

_________________________________________________________________________________________________________





108

Current Assets - Total (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

2176.38 661.20 601.37 561.17 556.78 494.38 376.09 312.77 310.26 303.08 278.13 270.31 260.75 247.72 230.69 223.12 218.85 205.46 183.40 181.89 161.43 161.30 156.77 144.53 142.44 133.36 132.09 128.79 128.79 120.79 115.63 99.44 81.28 73.08 70.33 70.20 69.00 65.50 65.47 63.00 58.39 57.62 50.28 33.71 30.31 28.82 28.38 15.14 15.11 10.78 10.76

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Netherlands Switzerland Liechtenstein Estonia Iceland Germany Vatican City Italy Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Andorra Finland Sweden Spain Slovenia Denmark the United Kingdom Faroe Islands France Albania Norway Luxembourg Austria San Marino Guernsey Jersey Portugal Cyprus Ireland Poland Moldova Kazakhstan Bulgaria Czech Republic Latvia Croatia Greece Malta Isle of Man Monaco Hungary Ukraine Gibraltar Georgia Belarus Slovakia Russian Federation Lithuania

_________________________________________________________________________________________________________




109

Property Plant and Equipment - Net Countries

Value ($K/employee)

Rank

Percentile

8402.94 2859.49 2679.52 1670.96 1551.04 1182.19 1159.21 1102.27 1013.54 1007.51 974.90 905.48 899.81 845.51 782.65 706.89 705.75 654.83 640.04 630.75 625.75 591.96 523.82 466.46 463.68 452.34 418.10 393.73 389.94 385.81 384.82 384.76 384.33 368.66 311.32 247.69 211.63 165.74 132.62 111.56 53.84 27.05 16.52 16.39 13.71

1 2 3 5 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 40 42 44 45 46 47 49 50 51 52 53

98.11 96.23 94.34 90.57 88.68 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 24.53 20.75 16.98 15.09 13.21 11.32 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Australia Pakistan Peru China Thailand Malaysia USA Sweden South Korea Hong Kong Spain Canada Argentina Japan Austria Italy Netherlands Belgium Chile Portugal New Zealand Switzerland Norway Luxembourg the United Kingdom Finland Brazil Philippines Denmark Turkey Taiwan Mexico France Germany Indonesia Poland Czech Republic Greece Hungary South Africa India Russian Federation Israel Ireland Singapore

Oceana the Middle East Latin America Asia Asia Asia North America Europe Asia Asia Europe North America Latin America Asia Europe Europe Europe Europe Latin America Europe Oceana Europe Europe Europe Europe Europe Latin America Asia Europe the Middle East Asia Latin America Europe Europe Asia Europe Europe Europe Europe Africa Asia Europe the Middle East Europe Asia

_________________________________________________________________________________________________________





110

Property Plant and Equipment - Net (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

2338.97 1171.10 1102.27 977.09 974.90 966.11 915.22 782.65 775.21 755.83 755.83 712.60 706.89 705.75 654.83 648.01 630.75 603.77 591.96 552.38 523.82 466.46 463.68 452.34 389.94 384.33 368.66 366.57 336.40 326.94 315.38 247.69 222.70 214.31 213.92 211.63 200.88 200.79 165.74 153.61 151.59 132.62 119.26 113.39 111.64 74.82 74.65 27.05 26.99 16.39 13.29

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Albania Iceland Sweden Estonia Spain Faroe Islands Slovenia Austria San Marino Jersey Guernsey Vatican City Italy Netherlands Belgium Andorra Portugal Cyprus Switzerland Liechtenstein Norway Luxembourg the United Kingdom Finland Denmark France Germany Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Poland Moldova Kazakhstan Bulgaria Czech Republic Latvia Croatia Greece Malta Isle of Man Hungary Ukraine Gibraltar Georgia Belarus Slovakia Russian Federation Lithuania Ireland Monaco

_________________________________________________________________________________________________________




111

Accumulated Depreciation - Total Countries

Value ($K/employee)

Rank

Percentile

1479.43 1472.03 1314.95 1265.65 1099.93 907.12 839.57 833.72 742.68 655.57 647.23 626.55 580.71 580.65 481.64 428.26 416.84 366.09 333.37 323.79 315.23 304.64 229.66 214.72 209.83 205.08 203.78 202.53 188.55 166.84 152.87 152.45 135.76 132.58 107.34 97.23 40.99 38.82 28.76 20.57 20.40 13.26 10.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20 21 22 23 26 27 28 29 30 31 32 33 34 35 37 38 40 42 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 60.78 58.82 56.86 54.90 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 27.45 25.49 21.57 17.65 11.76 9.80 7.84 5.88 3.92 1.96 0.00

Region

_________________________________________________________________________________________________________

Netherlands Portugal Austria Japan Germany China Luxembourg Pakistan Spain Belgium Finland Sweden Switzerland USA Peru Australia Hong Kong South Korea Canada Chile Thailand Norway Italy Denmark France Brazil Malaysia the United Kingdom Poland Taiwan Turkey Mexico Philippines Czech Republic Indonesia Hungary India Russian Federation New Zealand Israel Ireland Singapore Greece

Europe Europe Europe Asia Europe Asia Europe the Middle East Europe Europe Europe Europe Europe North America Latin America Oceana Asia Asia North America Latin America Asia Europe Europe Europe Europe Latin America Asia Europe Europe Asia the Middle East Latin America Asia Europe Asia Europe Asia Europe Oceana the Middle East Europe Asia Europe

_________________________________________________________________________________________________________





112

Accumulated Depreciation - Total (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

1479.43 1472.03 1409.06 1314.95 1302.45 1269.89 1269.89 1099.93 839.57 742.68 697.22 655.57 647.23 626.55 586.60 580.71 541.88 420.43 399.71 352.92 304.64 231.51 229.66 214.72 209.83 202.53 188.55 169.52 163.14 162.84 145.25 133.29 132.58 129.54 125.85 125.79 124.96 97.23 87.43 83.13 81.85 71.68 71.51 38.82 38.73 29.78 20.40 12.86 10.06 9.32 9.20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Netherlands Portugal Cyprus Austria San Marino Guernsey Jersey Germany Luxembourg Spain Slovenia Belgium Finland Sweden Iceland Switzerland Liechtenstein Albania Faroe Islands Estonia Norway Vatican City Italy Denmark France the United Kingdom Poland Moldova Kazakhstan Bulgaria Romania Bosnia & Herzegovina Czech Republic Macedonia Latvia Croatia Serbia & Montenegro Hungary Ukraine Gibraltar Georgia Belarus Slovakia Russian Federation Lithuania Andorra Ireland Monaco Greece Malta Isle of Man

_________________________________________________________________________________________________________




113

Intangible Other Assets Countries

Value ($K/employee)

Rank

Percentile

380.71 328.77 194.33 124.03 101.36 74.19 72.78 72.58 63.95 61.19 60.84 60.34 59.65 59.25 50.57 40.86 40.64 40.46 38.31 35.82 31.23 23.39 20.35 13.17 11.57 10.75 9.76 7.91 6.29 5.80 2.69 2.58 1.88 1.67 1.24 0.88 0.88 0.75 0.67 0.49 0.13 0.02 0.02

1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 18 19 20 21 23 24 27 28 29 30 31 32 33 34 35 37 38 39 40 41 42 43 45 46 47 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 68.63 64.71 62.75 60.78 58.82 54.90 52.94 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 27.45 25.49 23.53 21.57 19.61 17.65 15.69 11.76 9.80 7.84 3.92 1.96 0.00

Region

_________________________________________________________________________________________________________

USA New Zealand Australia Italy Portugal Hong Kong Norway Austria Philippines Switzerland Israel Ireland Belgium the United Kingdom Indonesia Chile Finland France Malaysia Spain Thailand Germany Netherlands South Korea Canada Sweden Luxembourg China Japan Peru Poland Czech Republic Brazil Denmark South Africa Turkey Mexico Greece Hungary Singapore Argentina Russian Federation Pakistan

North America Oceana Oceana Europe Europe Asia Europe Europe Asia Europe the Middle East Europe Europe Europe Asia Latin America Europe Europe Asia Europe Asia Europe Europe Asia North America Europe Europe Asia Asia Latin America Europe Europe Latin America Europe Africa the Middle East Latin America Europe Europe Asia Latin America Europe the Middle East

_________________________________________________________________________________________________________





114

Intangible Other Assets (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

384.61 340.47 125.03 124.03 101.36 97.03 72.78 72.58 71.89 71.15 70.09 70.09 61.19 60.34 59.65 59.25 57.10 40.64 40.46 35.82 33.63 23.39 20.35 12.70 10.75 9.76 5.07 2.69 2.58 2.45 2.45 2.42 2.33 2.32 1.67 0.84 0.77 0.75 0.75 0.72 0.69 0.68 0.67 0.60 0.57 0.57 0.48 0.22 0.22 0.02 0.02

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Iceland Andorra Vatican City Italy Portugal Cyprus Norway Austria San Marino Faroe Islands Jersey Guernsey Switzerland Ireland Belgium the United Kingdom Liechtenstein Finland France Spain Slovenia Germany Netherlands Estonia Sweden Luxembourg Albania Poland Czech Republic Latvia Croatia Moldova Kazakhstan Bulgaria Denmark Romania Bosnia & Herzegovina Macedonia Greece Serbia & Montenegro Malta Isle of Man Hungary Ukraine Gibraltar Georgia Monaco Belarus Slovakia Russian Federation Lithuania

_________________________________________________________________________________________________________




3.7 3.7.1

115

PRODUCTIVITY IN ESTONIA: LIABILITY-LABOR RATIOS Overview

In this chapter we consider the liability-labor ratios of companies operating in Estonia benchmarked against global averages for electric services. For ratios where there are large deviations between Estonia and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of productivity ratios is presented in the form of ranks and percentiles. Certain key liability-labor ratios are highlighted for electric services across countries in the comparison group. Definitions of liability statement terms are given in Chapter 3. In the case of liability-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. I then report the larger liability-labor ratio gaps for electric services that Estonia has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.




3.7.2

116

Liability to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for electric services in Estonia based on latest financial results available. Labor-liability Ratios ($k/employee) Estonia Europe World Avg. _________________________________________________________________________________________________________


246.64 282.08 24.21 18.92 62.05 628.26 326.60 326.57 0.03 33.40 -6.25 37.83 45.40 8.79 984.71 5.01 716.10 111.15 181.78 174.35 37.76 95.01 201.44 -0.80 -1.79 21.06 1705.83

72.61 62.57 13.27 5.78 56.05 194.98 178.15 167.16 11.07 62.74 18.56 34.96 19.08 63.91 499.26 8.79 340.76 110.76 53.12 31.82 53.36 50.64 95.06 -3.14 -0.05 1.33 875.73

51.76 107.78 8.82 14.41 63.00 231.08 397.36 395.59 1.83 14.78 22.92 23.19 5.93 43.88 707.54 64.52 425.89 161.04 48.86 7.52 37.57 50.42 62.93 -0.04 0.19 1.06 1204.34

_________________________________________________________________________________________________________





3.7.3

117

Liability and Equity to Labor: International Gaps

The following graphics summarize for electric services the large labor-liability gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Accounts Payable ($k/employee) 250

246.64 194.88

200 150 72.61

100 50

51.76

0 Estonia

Europe

World Average

Gap

Gap: Short Term Debt & Current Portion of Long Term Debt ($k/employee) 300

282.08

250 174.3

200 150

107.78

100

62.57

50 0 Estonia

Europe

World Average

Gap

Gap: Current Liabilities - Total ($k/employee) 800

628.26

600 397.18

400 194.98

200

231.08

0 Estonia


Europe

World Average

Gap



118

Gap: Long Term Debt ($k/employee) 400

397.36 326.6

300 178.15

200 100 0

-70.76

-100 Estonia

Europe

World Average

Gap

Gap: Long Term Debt Excluding Capitalized Leases ($k/employee) 400

395.59 326.57

300 167.16

200 100 0

-69.02

-100 Estonia

Europe

World Average

Gap

Gap: Total Liabilities ($k/employee) 1000

984.71 707.54

800 499.26

600 400

277.17

200 0 Estonia

Europe

World Average

Gap

Gap: Common Equity ($k/employee) 800

716.1

600 340.76

400

425.89 290.21

200 0 Estonia


Europe

World Average

Gap



119

Gap: Capital Surplus ($k/employee) 200

181.78 132.92

150 100 53.12 50

48.86

0 Estonia

Europe

World Average

Gap

Gap: Revaluation Reserves ($k/employee) 200

174.35

166.83

150 100 31.82

50

7.52

0 Estonia

Europe

World Average

Gap

Gap: Retained Earnings ($k/employee) 250 200

201.44 138.51

150

95.06

100

62.93

50 0 Estonia

Europe

World Average

Gap

Gap: Total Liabilities & Shareholders Equity ($k/employee) 2000

1705.83

1500

1204.34 875.73

1000

501.49

500 0 Estonia


Europe

World Average

Gap



3.7.4

120


We now consider the distribution of liability-labor ratios using ranks and percentiles across . What percent of countries have a value lower or higher than Estonia (what is the indicator's rank or percentile)? The table below answers this question with respect to liability-labor ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key liabilitylabor ratios are highlighted in additional tables. Liability Structure ($k/employee)

Estonia

Rank of Total

Percentile


246.64 282.08 24.21 18.92 62.05 628.26 326.60 326.57 0.03 33.40 -6.25 37.83 45.40 8.79 984.71 5.01 716.10 111.15 181.78 174.35 37.76 95.01 201.44 -0.80 -1.79 21.06 1705.83

4 of 52 5 of 54 8 of 49 6 of 28 24 of 54 6 of 54 22 of 53 20 of 53 22 of 23 16 of 39 34 of 41 12 of 23 6 of 24 31 of 52 15 of 54 27 of 40 12 of 54 26 of 52 8 of 43 3 of 21 17 of 48 8 of 30 12 of 52 18 of 27 9 of 10 2 of 18 12 of 54

92.31 90.74 83.67 78.57 55.56 88.89 58.49 62.26 4.35 58.97 17.07 47.83 75.00 40.38 72.22 32.50 77.78 50.00 81.40 85.71 64.58 73.33 76.92 33.33 10.00 88.89 77.78

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________





121

Accounts Payable Countries

Value ($K/employee)

Rank

Percentile

1041.24 482.81 255.84 176.55 149.67 112.73 106.91 101.11 91.22 90.68 76.01 71.12 68.37 64.05 50.78 50.64 50.64 44.33 44.01 42.93 42.04 39.89 39.19 37.05 33.96 33.49 28.14 27.05 25.62 25.41 23.77 22.40 21.11 20.37 19.98 19.74 17.65 12.10 11.06 10.40 10.28 4.22 3.68

1 2 3 4 5 6 7 8 9 10 11 12 13 14 18 19 20 23 24 25 26 27 28 29 31 32 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 64.71 62.75 60.78 54.90 52.94 50.98 49.02 47.06 45.10 43.14 39.22 37.25 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96

Region

_________________________________________________________________________________________________________

Belgium Netherlands South Korea Australia Switzerland New Zealand USA Italy China Luxembourg Canada Spain Thailand Philippines Turkey Mexico Indonesia Portugal Pakistan Peru France Czech Republic Sweden the United Kingdom Austria Germany Poland Hong Kong Israel Ireland Japan Brazil Norway Malaysia Denmark Chile Singapore Taiwan India Hungary Finland Russian Federation Greece

Europe Europe Asia Oceana Europe Oceana North America Europe Asia Europe North America Europe Asia Asia the Middle East Latin America Asia Europe the Middle East Latin America Europe Europe Europe Europe Europe Europe Europe Asia the Middle East Europe Asia Latin America Europe Asia Europe Latin America Asia Asia Asia Europe Europe Europe Europe

_________________________________________________________________________________________________________





122

Accounts Payable (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

1041.24 482.81 246.64 149.67 139.66 116.74 108.00 101.92 101.11 90.68 71.12 66.77 48.25 44.33 44.28 43.03 42.43 42.04 41.51 39.89 39.19 37.87 37.85 37.47 37.05 33.96 33.64 33.49 32.80 32.80 28.14 25.94 25.41 25.30 24.35 24.30 21.11 19.98 17.11 10.40 10.28 9.35 8.89 8.75 4.22 4.21 3.68 3.41 3.38 3.37 3.37

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Netherlands Estonia Switzerland Liechtenstein Andorra Iceland Vatican City Italy Luxembourg Spain Slovenia Romania Portugal Bosnia & Herzegovina Macedonia Cyprus France Serbia & Montenegro Czech Republic Sweden Latvia Croatia Albania the United Kingdom Austria San Marino Germany Guernsey Jersey Poland Faroe Islands Ireland Moldova Kazakhstan Bulgaria Norway Denmark Monaco Hungary Finland Ukraine Gibraltar Georgia Russian Federation Lithuania Greece Malta Belarus Slovakia Isle of Man

_________________________________________________________________________________________________________




123

Current Liabilities - Total Countries

Value ($K/employee)

Rank

Percentile

1445.92 965.60 786.73 724.09 651.70 491.34 388.98 381.37 326.95 319.13 282.17 257.98 226.98 210.87 206.68 195.11 192.73 190.72 189.62 184.69 177.92 174.88 173.37 167.66 158.37 157.93 155.06 154.42 144.24 140.68 140.46 134.60 130.12 80.42 76.93 57.85 54.76 54.31 52.30 48.64 40.47 28.56 28.47 26.21 7.64

1 2 3 4 5 6 7 8 9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 34 35 36 37 39 41 42 43 44 45 46 47 48 49 50 51 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 35.85 33.96 32.08 30.19 26.42 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 0.00

Region

_________________________________________________________________________________________________________

Belgium Pakistan Netherlands Australia South Korea China Italy USA Peru Spain Switzerland Austria Japan Malaysia New Zealand Sweden Portugal Thailand the United Kingdom Argentina Philippines Hong Kong Canada Finland Turkey Mexico Germany Norway Denmark Indonesia Luxembourg France Chile Czech Republic Brazil Hungary Israel Ireland Taiwan Poland Greece South Africa Singapore India Russian Federation

Europe the Middle East Europe Oceana Asia Asia Europe North America Latin America Europe Europe Europe Asia Asia Oceana Europe Europe Asia Europe Latin America Asia Asia North America Europe the Middle East Latin America Europe Europe Europe Asia Europe Europe Latin America Europe Latin America Europe the Middle East Europe Asia Europe Europe Africa Asia Asia Europe

_________________________________________________________________________________________________________





124

Current Liabilities - Total (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

1445.92 786.73 628.26 392.13 388.98 385.28 319.13 299.59 285.40 282.17 263.31 257.98 255.53 249.14 249.14 214.03 195.11 192.73 189.62 184.49 167.69 167.66 155.06 154.42 150.47 144.24 140.46 138.08 134.60 134.20 129.45 80.42 76.34 76.30 57.85 54.31 52.02 49.47 48.70 48.64 43.73 42.09 42.01 40.47 37.51 37.02 27.61 16.55 16.51 7.64 7.62

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Netherlands Estonia Vatican City Italy Iceland Spain Slovenia Albania Switzerland Liechtenstein Austria San Marino Guernsey Jersey Andorra Sweden Portugal the United Kingdom Cyprus Faroe Islands Finland Germany Norway Romania Denmark Luxembourg Bosnia & Herzegovina France Macedonia Serbia & Montenegro Czech Republic Latvia Croatia Hungary Ireland Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Greece Malta Isle of Man Monaco Belarus Slovakia Russian Federation Lithuania

_________________________________________________________________________________________________________




125

Long Term Debt Countries

Value ($K/employee)

Rank

Percentile

5053.36 1718.01 1114.48 928.34 665.12 643.06 637.93 614.52 475.98 465.67 440.17 383.58 344.20 342.83 339.55 338.78 333.57 329.43 293.30 269.21 268.48 268.47 258.81 256.07 228.09 215.45 190.94 159.56 71.48 65.89 55.36 48.37 44.47 39.06 33.59 33.32 28.18 18.64 12.01 2.13 1.28 0.80 0.50 0.30

1 2 3 5 7 8 9 10 11 12 13 14 16 17 18 19 20 21 22 24 25 26 27 28 31 32 34 35 36 37 38 39 40 41 42 43 44 46 47 48 49 50 51 52

98.08 96.15 94.23 90.38 86.54 84.62 82.69 80.77 78.85 76.92 75.00 73.08 69.23 67.31 65.38 63.46 61.54 59.62 57.69 53.85 51.92 50.00 48.08 46.15 40.38 38.46 34.62 32.69 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 15.38 11.54 9.62 7.69 5.77 3.85 1.92 0.00

Region

_________________________________________________________________________________________________________

Australia Pakistan Thailand China Canada USA Malaysia Sweden Japan Peru Belgium Austria Finland Portugal Philippines South Korea Netherlands Norway New Zealand Turkey Indonesia Mexico Italy Spain Hong Kong Chile the United Kingdom Switzerland France Denmark Germany Luxembourg Brazil South Africa Israel Ireland Czech Republic Poland India Hungary Singapore Greece Russian Federation Taiwan

Oceana the Middle East Asia Asia North America North America Asia Europe Asia Latin America Europe Europe Europe Europe Asia Asia Europe Europe Oceana the Middle East Asia Latin America Europe Europe Asia Latin America Europe Europe Europe Europe Europe Europe Latin America Africa the Middle East Europe Europe Europe Asia Europe Asia Europe Europe Asia

_________________________________________________________________________________________________________





126

Long Term Debt (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

649.66 614.52 440.17 406.49 383.58 379.93 370.43 370.43 344.20 342.83 333.57 329.43 328.17 326.60 303.73 260.90 258.81 256.07 255.78 240.40 234.73 228.13 220.06 218.72 190.94 159.56 148.89 71.48 65.89 55.36 48.37 33.32 28.18 26.75 26.74 26.43 26.37 18.64 16.76 16.13 16.10 2.13 1.92 1.83 1.80 1.24 0.80 0.74 0.73 0.50 0.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Iceland Sweden Belgium Albania Austria San Marino Guernsey Jersey Finland Portugal Netherlands Norway Cyprus Estonia Andorra Vatican City Italy Spain Romania Slovenia Bosnia & Herzegovina Macedonia Serbia & Montenegro Faroe Islands the United Kingdom Switzerland Liechtenstein France Denmark Germany Luxembourg Ireland Czech Republic Latvia Croatia Belarus Slovakia Poland Moldova Kazakhstan Bulgaria Hungary Ukraine Gibraltar Georgia Monaco Greece Malta Isle of Man Russian Federation Lithuania

_________________________________________________________________________________________________________




127

Total Liabilities Countries

Value ($K/employee)

Rank

Percentile

6613.83 2696.71 2676.79 1983.24 1428.68 1339.61 1173.71 1047.77 1031.31 1030.81 1021.45 1002.73 906.27 883.05 780.77 757.68 711.22 639.46 601.28 596.00 561.51 523.78 500.81 470.26 462.25 448.88 447.66 442.54 414.15 398.88 288.56 285.03 230.76 187.10 164.58 139.18 95.25 90.57 89.83 87.88 75.68 64.93 50.42 32.53 8.47

1 2 3 4 5 6 7 9 11 12 13 14 15 16 17 19 20 21 22 23 24 25 26 27 28 29 30 32 34 35 38 39 40 41 42 43 44 45 46 47 48 49 50 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 79.25 77.36 75.47 73.58 71.70 69.81 67.92 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 39.62 35.85 33.96 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Australia Pakistan Belgium USA China Thailand Netherlands Malaysia Peru Sweden South Korea Switzerland Canada Austria Japan Italy Spain Finland Portugal New Zealand Germany Philippines Norway Hong Kong France Turkey Mexico the United Kingdom Indonesia Chile Denmark Luxembourg Taiwan Argentina Brazil Czech Republic South Africa Israel Ireland Poland Greece Hungary India Singapore Russian Federation

Oceana the Middle East Europe North America Asia Asia Europe Asia Latin America Europe Asia Europe North America Europe Asia Europe Europe Europe Europe Oceana Europe Asia Europe Asia Europe the Middle East Latin America Europe Asia Latin America Europe Europe Asia Latin America Latin America Europe Africa the Middle East Europe Europe Europe Europe Asia Asia Europe

_________________________________________________________________________________________________________





128

Total Liabilities (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

2676.79 2003.58 1173.71 1030.81 1002.73 984.71 935.69 900.24 883.05 874.65 852.78 852.78 763.81 757.68 711.22 667.68 639.46 617.19 601.28 575.56 561.51 500.81 462.25 450.94 442.54 426.50 391.39 380.39 366.93 288.56 285.03 139.18 132.11 132.05 89.83 87.88 79.01 76.03 75.89 75.68 70.14 69.22 64.93 58.38 55.51 54.66 45.65 45.55 31.54 8.47 8.45

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Iceland Netherlands Sweden Switzerland Estonia Liechtenstein Albania Austria San Marino Jersey Guernsey Vatican City Italy Spain Slovenia Finland Andorra Portugal Cyprus Germany Norway France Faroe Islands the United Kingdom Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Denmark Luxembourg Czech Republic Latvia Croatia Ireland Poland Moldova Kazakhstan Bulgaria Greece Malta Isle of Man Hungary Ukraine Gibraltar Georgia Belarus Slovakia Monaco Russian Federation Lithuania

_________________________________________________________________________________________________________




129

Common Equity Countries

Value ($K/employee)

Rank

Percentile

3193.36 2023.62 1897.43 1032.13 950.56 924.81 884.97 866.46 742.82 652.55 620.86 612.83 598.43 586.53 460.24 444.94 418.44 408.94 379.69 375.92 374.59 354.32 335.75 334.83 318.74 309.46 309.30 289.14 286.84 257.08 244.69 242.07 236.28 209.60 203.29 165.50 124.14 123.29 108.87 87.11 86.39 79.18 58.94 32.31 29.74

1 2 3 5 6 7 8 9 10 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 33 35 36 37 38 40 41 43 44 45 46 47 48 49 50 52 53

98.11 96.23 94.34 90.57 88.68 86.79 84.91 83.02 81.13 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 37.74 33.96 32.08 30.19 28.30 24.53 22.64 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Australia Peru Pakistan Hong Kong USA Belgium Thailand Argentina South Korea Switzerland Malaysia China New Zealand Spain Italy Canada Chile Sweden Luxembourg Germany Taiwan Austria Turkey Mexico Brazil Philippines Portugal the United Kingdom Norway Denmark Indonesia Poland Japan Finland Netherlands Czech Republic France Greece Hungary Israel Ireland South Africa India Singapore Russian Federation

Oceana Latin America the Middle East Asia North America Europe Asia Latin America Asia Europe Asia Asia Oceana Europe Europe North America Latin America Europe Europe Europe Asia Europe the Middle East Latin America Latin America Asia Europe Europe Europe Europe Asia Europe Asia Europe Europe Europe Europe Europe Europe the Middle East Europe Africa Asia Asia Europe

_________________________________________________________________________________________________________





130

Common Equity (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

1766.43 989.72 960.31 924.81 716.10 652.55 619.72 608.92 586.53 550.63 463.97 460.24 408.94 379.69 375.92 354.32 350.95 342.18 342.18 319.01 309.30 296.07 292.75 289.14 286.84 284.52 274.45 257.08 242.07 217.64 209.60 209.44 209.06 203.29 165.50 157.09 157.02 124.14 123.29 114.27 112.76 108.87 97.91 93.09 91.65 86.39 51.01 50.89 31.34 29.74 29.67

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Albania Faroe Islands Iceland Belgium Estonia Switzerland Andorra Liechtenstein Spain Slovenia Vatican City Italy Sweden Luxembourg Germany Austria San Marino Guernsey Jersey Romania Portugal Cyprus Bosnia & Herzegovina the United Kingdom Norway Macedonia Serbia & Montenegro Denmark Poland Moldova Finland Kazakhstan Bulgaria Netherlands Czech Republic Latvia Croatia France Greece Malta Isle of Man Hungary Ukraine Gibraltar Georgia Ireland Belarus Slovakia Monaco Russian Federation Lithuania

_________________________________________________________________________________________________________




131

Retained Earnings Countries

Value ($K/employee)

Rank

Percentile

377.27 309.78 276.91 273.65 273.15 265.16 260.72 227.13 208.95 196.97 160.44 151.05 149.84 128.23 124.48 122.41 106.60 106.31 101.39 95.19 85.30 79.40 78.75 75.29 73.16 71.05 66.83 66.34 63.84 43.76 34.23 23.82 22.51 21.00 18.92 18.24 15.11 7.19 6.05 2.92 2.35 0.00 -0.51

1 2 3 4 5 6 7 10 11 12 13 14 15 16 17 18 20 21 22 25 26 27 28 29 30 32 33 34 35 36 37 39 40 41 42 43 44 45 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 60.78 58.82 56.86 50.98 49.02 47.06 45.10 43.14 41.18 37.25 35.29 33.33 31.37 29.41 27.45 23.53 21.57 19.61 17.65 15.69 13.73 11.76 7.84 5.88 3.92 1.96 0.00

Region

_________________________________________________________________________________________________________

Switzerland Thailand Malaysia New Zealand Hong Kong Austria USA Norway South Korea Canada the United Kingdom Japan Germany Philippines Finland Australia Turkey Mexico Indonesia Portugal Spain Israel Ireland South Africa Italy Sweden Argentina Czech Republic Chile Peru India Denmark Luxembourg Greece France Brazil Taiwan China Singapore Russian Federation Hungary Pakistan Poland

Europe Asia Asia Oceana Asia Europe North America Europe Asia North America Europe Asia Europe Asia Europe Oceana the Middle East Latin America Asia Europe Europe the Middle East Europe Africa Europe Europe Latin America Europe Latin America Latin America Asia Europe Europe Europe Europe Latin America Asia Asia Asia Europe Europe the Middle East Europe

_________________________________________________________________________________________________________





132

Retained Earnings (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

377.27 352.05 283.38 265.16 263.39 262.64 261.92 256.07 256.07 227.13 201.44 160.44 149.84 124.48 101.29 95.19 92.95 91.12 90.34 87.14 85.30 80.08 78.75 73.75 73.16 71.05 66.34 62.97 62.94 38.20 23.82 22.51 21.00 19.46 19.20 18.92 6.54 6.53 5.87 2.92 2.91 2.35 2.11 2.01 1.98 -0.44 -0.44 -0.46 -0.51

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Switzerland Liechtenstein Andorra Austria Iceland San Marino Faroe Islands Guernsey Jersey Norway Estonia the United Kingdom Germany Finland Romania Portugal Bosnia & Herzegovina Cyprus Macedonia Serbia & Montenegro Spain Slovenia Ireland Vatican City Italy Sweden Czech Republic Latvia Croatia Albania Denmark Luxembourg Greece Malta Isle of Man France Belarus Slovakia Monaco Russian Federation Lithuania Hungary Ukraine Gibraltar Georgia Bulgaria Kazakhstan Moldova Poland

_________________________________________________________________________________________________________





3.8 3.8.1

133

PRODUCTIVITY IN ESTONIA: INCOME-LABOR RATIOS Overview

In this chapter we consider the income-labor ratios for electric services in Estonia benchmarked against global averages. For ratios where there are large deviations between the average firm operating in Estonia and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key income-labor ratios are highlighted across countries in the comparison group. In the case of income-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. We then report the larger income-labor ratio gaps for electric services that Estonia has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.




3.8.2

134

Income to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for electric services in Estonia based on latest financial results available. Labor-income Ratios ($k/employee) Estonia Europe World Avg. _________________________________________________________________________________________________________


2136.43 1842.01 77.24 217.19 91.52 2156.17 13.53 113.02 4.26 1.40 11.54 4.11 129.96 25.45 104.50 34.86 29.24 0.57 69.17 69.17 69.17

564.87 494.27 36.79 83.66 27.14 419.32 16.09 48.96 3.07 8.15 13.15 21.77 75.80 18.11 57.86 15.03 11.97 0.40 42.70 42.74 42.52

554.26 408.20 38.32 126.90 26.85 253.94 11.58 75.11 0.87 2.24 8.54 6.84 82.52 23.78 63.72 12.64 6.95 6.12 45.85 45.80 45.74

_________________________________________________________________________________________________________





3.8.3

135

Income to Labor: Gaps

The following graphics summarize for electric services the large labor-income gaps between firms operating in Estonia and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Net Sales or Revenues ($k/employee) 2500

2136.43

2000

1582.17

1500 1000

564.87

554.26

500 0 Estonia

Europe

World Average

Gap

Gap: Cost of Goods Sold (Excluding Depreciation) ($k/employee) 2000

1842.01 1433.81

1500 1000 494.27

500

408.2

0 Estonia

Europe

World Average

Gap

Gap: Depreciation, Depletion & Amortization ($k/employee) 80

77.24

60 36.79

40

38.32

38.92

20 0 Estonia


Europe

World Average

Gap



136

Gap: Gross Income ($k/employee) 250

217.19

200 126.9

150

90.29

83.66

100 50 0 Estonia

Europe

World Average

Gap

Gap: Selling, General & Administrative Expenses ($k/employee) 100

91.52

80

64.67

60 40

27.14

26.85

20 0 Estonia

Europe

World Average

Gap

Gap: Other Operating Expenses ($k/employee) 2500

2156.17

1902.23

2000 1500 1000 419.32

500

253.94

0 Estonia

Europe

World Average

Gap

Gap: Operating Income ($k/employee) 120

113.02

100

75.11

80 48.96

60

37.91

40 20 0 Estonia


Europe

World Average

Gap



137

Gap: Earnings Before Interest and Taxes (EBIT) ($k/employee) 150

129.96

100

75.8

82.52 47.44

50 0 Estonia

Europe

World Average

Gap

Gap: Pretax Income ($k/employee) 120

104.5

100 80

57.86

60

63.72 40.78

40 20 0 Estonia

Europe

World Average

Gap

Gap: Net Income Before Preferred Dividends ($k/employee) 80

69.17

60

42.74

45.8

40

23.37

20 0 Estonia

Europe

World Average

Gap

Gap: Net Income Available to Common ($k/employee) 80

69.17

60

42.52

45.74

40

23.43

20 0 Estonia


Europe

World Average

Gap



3.8.4

138


We now consider the distribution of income-labor ratios using ranks and percentiles across . What percent of countries have a value lower or higher than Estonia (what is the ratio's rank or percentile)? The table below answers this question with respect to income-labor ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key income-labor ratios are highlighted in additional tables. Income Structure ($k/employee)

Estonia

Rank of Total

Percentile


2136.43 1842.01 77.24 217.19 91.52 2156.17 13.53 113.02 4.26 1.40 11.54 4.11 129.96 25.45 104.50 34.86 29.24 0.57 69.17 69.17 69.17

4 of 54 4 of 53 6 of 54 8 of 53 5 of 37 3 of 52 23 of 45 16 of 54 9 of 29 26 of 37 13 of 52 34 of 54 18 of 54 24 of 54 17 of 54 10 of 54 6 of 39 26 of 37 16 of 54 16 of 54 16 of 54

92.59 92.45 88.89 84.91 86.49 94.23 48.89 70.37 68.97 29.73 75.00 37.04 66.67 55.56 68.52 81.48 84.62 29.73 70.37 70.37 70.37

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________





139

Cost of Goods Sold (Excluding Depreciation) Countries

Value ($K/employee)

Rank

Percentile

8588.44 2877.97 1910.73 1046.96 967.62 902.94 780.65 620.89 524.20 393.83 376.81 362.27 330.94 325.65 295.08 291.35 288.36 287.58 285.16 281.91 276.04 271.77 271.17 263.72 226.48 213.67 202.00 178.78 173.50 170.61 159.52 153.05 140.23 134.05 128.18 127.12 120.75 98.65 84.42 78.00 62.11 59.33 25.94 17.64

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 24 26 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 45 47 48 50 51

98.08 96.15 94.23 92.31 90.38 88.46 86.54 84.62 82.69 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 55.77 53.85 50.00 46.15 44.23 40.38 38.46 36.54 34.62 32.69 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 13.46 9.62 7.69 3.85 1.92

Region

_________________________________________________________________________________________________________

Belgium Netherlands South Korea Switzerland China Pakistan Australia Germany USA Spain Austria New Zealand the United Kingdom Thailand Sweden Japan Turkey Mexico Peru Italy Portugal Denmark Canada Argentina Luxembourg Hong Kong France Finland Hungary Chile Norway Czech Republic Malaysia Poland Israel Ireland Taiwan Philippines India Indonesia Singapore Brazil Greece Russian Federation

Europe Europe Asia Europe Asia the Middle East Oceana Europe North America Europe Europe Oceana Europe Asia Europe Asia the Middle East Latin America Latin America Europe Europe Europe North America Latin America Europe Asia Europe Europe Europe Latin America Europe Europe Asia Europe the Middle East Europe Asia Asia Asia Asia Asia Latin America Europe Europe

_________________________________________________________________________________________________________





140

Cost of Goods Sold (Excluding Depreciation) (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

8588.44 2877.97 1842.01 1046.96 976.97 620.89 529.58 393.83 376.81 375.16 373.22 369.72 363.89 363.89 330.94 295.08 284.19 281.91 276.04 273.98 271.77 264.23 251.43 248.92 244.36 235.72 226.48 204.89 202.00 178.78 173.50 159.52 156.02 153.05 148.35 146.06 145.27 145.21 134.05 127.12 120.52 115.98 115.77 60.23 25.94 24.04 23.72 17.64 17.60 13.98 13.94

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Netherlands Estonia Switzerland Liechtenstein Germany Iceland Spain Austria Andorra San Marino Slovenia Guernsey Jersey the United Kingdom Sweden Vatican City Italy Portugal Romania Denmark Cyprus Bosnia & Herzegovina Albania Macedonia Serbia & Montenegro Luxembourg Faroe Islands France Finland Hungary Norway Ukraine Czech Republic Gibraltar Georgia Latvia Croatia Poland Ireland Moldova Kazakhstan Bulgaria Monaco Greece Malta Isle of Man Russian Federation Lithuania Belarus Slovakia

_________________________________________________________________________________________________________




141

Selling, General & Administrative Expenses Countries

Value ($K/employee)

Rank

Percentile

131.11 96.42 94.93 92.19 62.55 55.72 47.76 47.00 45.59 38.86 38.64 38.53 37.09 33.20 31.36 28.31 28.16 26.39 25.65 23.48 21.94 18.31 16.85 16.11 13.60 10.33 9.42 8.86 8.28 7.24 6.98 0.02

1 2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 18 19 20 22 23 26 27 28 29 30 31 32 33 34 35 36

97.22 94.44 91.67 88.89 86.11 83.33 80.56 77.78 75.00 72.22 69.44 66.67 63.89 58.33 55.56 52.78 50.00 47.22 44.44 38.89 36.11 27.78 25.00 22.22 19.44 16.67 13.89 11.11 8.33 5.56 2.78 0.00

Region

_________________________________________________________________________________________________________

Japan USA South Korea Italy New Zealand the United Kingdom China Canada Norway Sweden Turkey Mexico Brazil Chile Germany Peru Thailand Australia France Switzerland Pakistan Taiwan Greece Malaysia Poland Hong Kong Denmark Singapore Hungary Austria Finland Russian Federation

Asia North America Asia Europe Oceana Europe Asia North America Europe Europe the Middle East Latin America Latin America Latin America Europe Latin America Asia Oceana Europe Europe the Middle East Asia Europe Asia Europe Asia Europe Asia Europe Europe Europe Europe

_________________________________________________________________________________________________________





142

Selling, General & Administrative Expenses (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

97.41 92.94 92.19 91.52 64.77 55.72 45.59 38.86 36.71 33.69 32.74 31.58 31.36 25.65 24.71 23.48 21.91 16.85 15.61 15.41 13.60 12.23 11.77 11.75 9.91 9.42 8.60 8.28 7.44 7.24 7.17 7.08 6.99 6.99 6.98 6.97 0.02 0.02

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

97.37 94.74 92.11 89.47 86.84 84.21 81.58 78.95 76.32 73.68 71.05 68.42 65.79 63.16 60.53 57.89 55.26 52.63 50.00 47.37 44.74 42.11 39.47 36.84 34.21 31.58 28.95 26.32 23.68 21.05 18.42 15.79 13.16 10.53 7.89 5.26 2.63 0.00

_________________________________________________________________________________________________________

Iceland Vatican City Italy Estonia Andorra the United Kingdom Norway Sweden Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Germany France Albania Switzerland Liechtenstein Greece Malta Isle of Man Poland Moldova Kazakhstan Bulgaria Faroe Islands Denmark Monaco Hungary Ukraine Austria San Marino Gibraltar Guernsey Jersey Finland Georgia Russian Federation Lithuania

_________________________________________________________________________________________________________





143

Operating Expenses - Total Countries

Value ($K/employee)

Rank

Percentile

92.60 72.85 62.92 59.96 53.75 50.14 43.21 36.36 34.24 32.04 28.75 28.41 27.09 23.55 22.52 21.00 19.83 19.67 14.04 11.48 10.57 10.28 7.96 7.07 6.71 6.28 5.83 5.14 4.94 4.90 4.53 2.48 1.86 1.80 1.49 0.01 0.01

1 2 3 4 5 6 7 8 9 10 12 13 14 16 17 18 20 21 22 23 24 25 28 29 30 31 32 33 34 35 37 39 40 41 42 43 44

97.73 95.45 93.18 90.91 88.64 86.36 84.09 81.82 79.55 77.27 72.73 70.45 68.18 63.64 61.36 59.09 54.55 52.27 50.00 47.73 45.45 43.18 36.36 34.09 31.82 29.55 27.27 25.00 22.73 20.45 15.91 11.36 9.09 6.82 4.55 2.27 0.00

Region

_________________________________________________________________________________________________________

Australia USA Belgium Switzerland Canada Germany Norway Philippines Austria Italy Indonesia France Spain the United Kingdom Netherlands Hong Kong Israel Ireland South Korea Japan Thailand Luxembourg Finland Portugal Malaysia Peru Czech Republic Singapore China Hungary Brazil India Sweden Russian Federation Poland Pakistan Denmark

Oceana North America Europe Europe North America Europe Europe Asia Europe Europe Asia Europe Europe Europe Europe Asia the Middle East Europe Asia Asia Asia Europe Europe Europe Asia Latin America Europe Asia Asia Europe Latin America Asia Europe Europe Europe the Middle East Europe

_________________________________________________________________________________________________________





144

Operating Expenses - Total (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

73.60 62.92 59.96 55.95 50.14 43.21 34.24 33.91 33.06 33.06 32.30 32.04 28.41 27.09 25.43 23.55 22.52 20.13 19.67 13.53 10.28 7.96 7.07 6.77 5.83 5.54 5.53 5.49 4.98 4.90 4.41 4.19 4.13 3.87 3.86 1.86 1.80 1.79 1.49 1.34 1.29 1.29 0.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

97.67 95.35 93.02 90.70 88.37 86.05 83.72 81.40 79.07 76.74 74.42 72.09 69.77 67.44 65.12 62.79 60.47 58.14 55.81 53.49 51.16 48.84 46.51 44.19 41.86 39.53 37.21 34.88 32.56 30.23 27.91 25.58 23.26 20.93 18.60 16.28 13.95 11.63 9.30 6.98 4.65 2.33 0.00

_________________________________________________________________________________________________________

Iceland Belgium Switzerland Liechtenstein Germany Norway Austria San Marino Guernsey Jersey Vatican City Italy France Spain Slovenia the United Kingdom Netherlands Faroe Islands Ireland Estonia Luxembourg Finland Portugal Cyprus Czech Republic Latvia Croatia Albania Monaco Hungary Ukraine Gibraltar Georgia Belarus Slovakia Sweden Russian Federation Lithuania Poland Moldova Kazakhstan Bulgaria Denmark

_________________________________________________________________________________________________________





145

Operating Income Countries

Value ($K/employee)

Rank

Percentile

691.54 685.01 268.59 187.36 183.81 164.53 145.39 132.51 120.61 120.29 119.96 117.23 102.15 97.55 87.96 86.73 79.16 75.16 68.52 62.94 61.38 59.43 55.35 49.23 45.80 34.80 32.34 31.49 28.34 18.43 18.09 18.09 17.83 17.82 15.20 14.03 11.18 7.73 5.82 5.80 5.77 1.85 1.79 -1.92 -11.98

1 2 3 5 6 7 8 10 12 13 14 15 17 18 19 20 21 22 23 25 26 27 29 30 31 33 34 35 36 37 38 39 40 41 42 43 45 46 47 48 49 50 51 52 53

98.11 96.23 94.34 90.57 88.68 86.79 84.91 81.13 77.36 75.47 73.58 71.70 67.92 66.04 64.15 62.26 60.38 58.49 56.60 52.83 50.94 49.06 45.28 43.40 41.51 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Australia Pakistan Peru Belgium Hong Kong Thailand Malaysia USA Argentina Turkey Mexico South Korea Sweden Switzerland Canada Spain China Philippines New Zealand Italy Chile Indonesia the United Kingdom Japan Austria Portugal Luxembourg Finland Denmark France Norway South Africa Germany Brazil Czech Republic Singapore Greece India Israel Hungary Ireland Russian Federation Taiwan Poland Netherlands

Oceana the Middle East Latin America Europe Asia Asia Asia North America Latin America the Middle East Latin America Asia Europe Europe North America Europe Asia Asia Oceana Europe Latin America Asia Europe Asia Europe Europe Europe Europe Europe Europe Europe Africa Europe Latin America Europe Asia Europe Asia the Middle East Europe Europe Europe Asia Europe Europe

_________________________________________________________________________________________________________





146

Operating Income (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

234.45 187.36 176.25 133.86 114.29 113.02 104.88 102.15 101.93 98.33 97.55 91.02 86.73 81.42 70.95 63.45 62.94 55.35 45.80 45.36 44.23 44.23 34.80 33.31 32.34 31.49 28.34 18.43 18.09 17.83 15.20 14.43 14.42 13.61 12.94 12.91 11.18 10.36 10.22 5.80 5.77 5.21 4.96 4.88 1.85 1.84 -1.66 -1.66 -1.73 -1.92 -11.98

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Albania Belgium Faroe Islands Iceland Romania Estonia Bosnia & Herzegovina Sweden Macedonia Serbia & Montenegro Switzerland Liechtenstein Spain Slovenia Andorra Vatican City Italy the United Kingdom Austria San Marino Guernsey Jersey Portugal Cyprus Luxembourg Finland Denmark France Norway Germany Czech Republic Latvia Croatia Monaco Belarus Slovakia Greece Malta Isle of Man Hungary Ireland Ukraine Gibraltar Georgia Russian Federation Lithuania Bulgaria Kazakhstan Moldova Poland Netherlands

_________________________________________________________________________________________________________




147

Earnings Before Interest and Taxes (EBIT) Countries

Value ($K/employee)

Rank

Percentile

772.70 756.16 297.03 252.59 239.94 200.12 187.25 186.74 177.14 162.10 159.22 154.68 134.80 116.15 114.49 112.88 110.86 110.65 90.55 90.42 77.88 73.54 68.91 65.29 62.20 61.58 59.48 57.12 45.66 44.38 35.25 31.14 28.09 24.99 23.94 23.30 22.85 18.32 17.80 11.36 9.78 5.38 5.33 2.55 2.06

1 2 3 4 5 6 7 8 10 12 13 14 17 18 19 20 21 22 23 24 25 26 27 29 30 31 32 34 35 36 38 39 40 41 42 43 44 45 46 48 49 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 81.13 77.36 75.47 73.58 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 45.28 43.40 41.51 39.62 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Australia Pakistan New Zealand Belgium Peru Hong Kong Turkey Mexico Thailand USA Switzerland Malaysia South Korea Luxembourg Sweden Spain Canada Argentina Germany Italy Philippines Austria China the United Kingdom Chile Indonesia Netherlands Finland Japan Portugal Greece Czech Republic Norway France Brazil Denmark South Africa Singapore Taiwan Hungary India Israel Ireland Russian Federation Poland

Oceana the Middle East Oceana Europe Latin America Asia the Middle East Latin America Asia North America Europe Asia Asia Europe Europe Europe North America Latin America Europe Europe Asia Europe Asia Europe Latin America Asia Europe Europe Asia Europe Europe Europe Europe Europe Latin America Europe Africa Asia Asia Europe Asia the Middle East Europe Europe Europe

_________________________________________________________________________________________________________





148

Earnings Before Interest and Taxes (EBIT) (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

307.60 252.59 209.45 191.90 177.91 163.76 163.27 159.22 158.68 153.06 148.57 129.96 116.15 114.49 112.88 105.97 91.15 90.55 90.42 73.54 72.84 71.02 71.02 65.29 59.48 57.12 44.38 42.49 35.25 32.67 32.24 31.14 29.56 29.54 28.09 24.99 23.30 17.77 13.89 13.85 11.36 10.21 9.71 9.56 5.33 2.55 2.54 2.06 1.86 1.79 1.78

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Andorra Belgium Albania Faroe Islands Romania Iceland Bosnia & Herzegovina Switzerland Macedonia Serbia & Montenegro Liechtenstein Estonia Luxembourg Sweden Spain Slovenia Vatican City Germany Italy Austria San Marino Guernsey Jersey the United Kingdom Netherlands Finland Portugal Cyprus Greece Malta Isle of Man Czech Republic Latvia Croatia Norway France Denmark Monaco Belarus Slovakia Hungary Ukraine Gibraltar Georgia Ireland Russian Federation Lithuania Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________




149

Pretax Income Countries

Value ($K/employee)

Rank

Percentile

524.60 367.06 271.02 208.54 189.35 188.28 139.33 139.00 138.62 127.22 123.68 113.08 108.40 108.07 91.21 82.06 80.64 71.47 68.44 65.04 56.99 53.37 49.13 46.39 42.20 41.68 35.04 29.65 28.24 26.02 19.95 17.65 17.28 16.15 15.96 14.49 13.05 12.21 10.61 8.51 2.61 2.59 2.44 0.91 -0.72

1 2 3 4 5 6 8 9 10 12 13 14 15 16 17 18 19 21 23 24 25 26 27 28 30 31 33 35 36 37 38 39 40 41 42 43 44 45 46 48 49 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 84.91 83.02 81.13 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 60.38 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 37.74 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Pakistan Australia New Zealand Belgium Peru Hong Kong Switzerland Turkey Mexico USA Malaysia Luxembourg South Korea Argentina Thailand Germany Spain China Italy Canada Sweden Philippines the United Kingdom Austria Indonesia Chile Greece Finland Japan Netherlands France Taiwan Czech Republic Portugal Denmark Singapore Brazil South Africa Hungary India Israel Ireland Russian Federation Norway Poland

the Middle East Oceana Oceana Europe Latin America Asia Europe the Middle East Latin America North America Asia Europe Asia Latin America Asia Europe Europe Asia Europe North America Europe Asia Europe Europe Asia Latin America Europe Europe Asia Europe Europe Asia Europe Europe Europe Asia Latin America Africa Europe Asia the Middle East Europe Europe Europe Europe

_________________________________________________________________________________________________________





150

Pretax Income (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

280.66 208.54 180.54 165.28 139.33 132.06 130.01 128.53 121.20 117.79 113.62 113.08 104.50 82.06 80.64 75.71 68.99 68.44 56.99 49.13 46.39 45.95 44.80 44.80 35.04 32.47 32.04 29.65 26.02 19.95 17.28 16.41 16.40 16.15 15.96 15.46 14.05 10.61 10.52 10.49 9.54 9.07 8.93 2.59 2.44 2.43 0.91 -0.62 -0.62 -0.64 -0.72

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Andorra Belgium Faroe Islands Albania Switzerland Romania Liechtenstein Iceland Bosnia & Herzegovina Macedonia Serbia & Montenegro Luxembourg Estonia Germany Spain Slovenia Vatican City Italy Sweden the United Kingdom Austria San Marino Guernsey Jersey Greece Malta Isle of Man Finland Netherlands France Czech Republic Latvia Croatia Portugal Denmark Cyprus Monaco Hungary Belarus Slovakia Ukraine Gibraltar Georgia Ireland Russian Federation Lithuania Norway Bulgaria Kazakhstan Moldova Poland

_________________________________________________________________________________________________________




151

Income Taxes Countries

Value ($K/employee)

Rank

Percentile

145.39 84.91 83.41 47.84 41.23 36.16 35.46 35.36 34.51 27.20 27.13 25.00 24.37 22.72 16.55 15.30 14.45 12.73 11.89 11.79 11.61 11.50 9.78 9.67 8.48 8.43 8.08 6.91 5.09 5.01 4.94 3.51 3.41 2.77 2.73 2.03 2.03 1.60 1.49 1.08 0.64 0.63 0.38 -0.46 -2.47

1 2 3 5 6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 29 30 31 32 33 34 35 36 37 38 39 41 42 44 46 48 49 50 51 52 53

98.11 96.23 94.34 90.57 88.68 86.79 84.91 83.02 81.13 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 50.94 49.06 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 22.64 20.75 16.98 13.21 9.43 7.55 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Australia Belgium Peru USA Argentina South Korea Turkey Mexico Malaysia Italy Hong Kong Switzerland Spain Germany Luxembourg Sweden New Zealand China Austria Thailand Japan the United Kingdom Canada Portugal Denmark Finland Greece France Brazil Chile Czech Republic Netherlands Singapore India Taiwan Hungary Philippines Indonesia Pakistan Russian Federation Israel Ireland South Africa Poland Norway

Oceana Europe Latin America North America Latin America Asia the Middle East Latin America Asia Europe Asia Europe Europe Europe Europe Europe Oceana Asia Europe Asia Asia Europe North America Europe Europe Europe Europe Europe Latin America Latin America Europe Europe Asia Asia Asia Europe Asia Asia the Middle East Europe the Middle East Europe Africa Europe Europe

_________________________________________________________________________________________________________





152

Income Taxes (Electric Services) Countries in Europe

Value ($K/employee)

Rank

Percentile

84.91 72.81 48.34 34.86 33.69 30.92 30.05 28.98 27.42 27.20 26.01 25.00 24.37 23.33 22.88 22.72 16.55 15.30 14.96 11.89 11.78 11.50 11.48 11.48 9.67 9.25 8.48 8.43 8.08 7.49 7.39 6.91 4.94 4.69 4.68 3.51 3.31 2.69 2.69 2.03 1.83 1.74 1.71 1.08 1.08 0.63 -0.40 -0.40 -0.41 -0.46 -2.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Belgium Albania Iceland Estonia Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Vatican City Italy Faroe Islands Switzerland Spain Liechtenstein Slovenia Germany Luxembourg Sweden Andorra Austria San Marino the United Kingdom Guernsey Jersey Portugal Cyprus Denmark Finland Greece Malta Isle of Man France Czech Republic Latvia Croatia Netherlands Monaco Belarus Slovakia Hungary Ukraine Gibraltar Georgia Russian Federation Lithuania Ireland Bulgaria Kazakhstan Moldova Poland Norway

_________________________________________________________________________________________________________





153


154

4 4.1

MACRO-ACCESSIBILITY IN ESTONIA EXECUTIVE SUMMARY

Estonia’s liberal foreign trade regime, which contains few tariff or non-tariff barriers, is nearly unique in Europe. Estonia also boasts a national currency, which is freely convertible at a fixed exchange rate, and conservative fiscal and monetary policies. Estonia has free trade regimes with EU and EFTA countries and also with Latvia, Lithuania, Ukraine, Slovakia, Poland, Hungary, Slovenia and the Czech Republic. Estonia has been a member of the WTO since 1999. Estonia’s business attitude towards the United States is positive and business relations between the U.S. and Estonia are increasingly significant. The primary competition for American companies in the Estonian marketplace is European suppliers, especially Finnish and Swedish companies. Estonia, being a small country of 1.4 million people, relies on its greatest natural asset -- its location at the crossroads of East and West. Estonia lies just south of Finland and across the Baltic Sea from Sweden. To the east are the huge potential markets of Northwest Russia. Having been a member of former Soviet Union, Estonians know how to do business in Russia and in other former Soviet countries. Estonia’s modern transportation and communication links provide a safe and reliable bridge for trade with former Soviet Union and the Nordic countries.

4.2 4.2.1

ECONOMIC FUNDAMENTALS AND DYNAMICS Government Intervention Risks

The economic reforms put in place in Estonia have limited the government’s role in the economy to an extraordinary degree. Because of a balanced budget legal requirement and the use of the currency board system, the government has an extremely restricted range of instruments with which to influence the economy - the size of Estonia’s money supply is directly determined by the amount of foreign exchange it can attract through exports, loans or investments. The exchange rate of the Estonian Kroon to the Euro is fixed at 1 EUR =15.6466EEK. Beyond the constraints imposed by the legally mandated balanced budget, the government has been extremely reluctant to issue sovereign guarantees from international financial institutions. In November 1999 Estonia became a member of the WTO. Since January 1, 2000, Estonia has imposed customs duties on agricultural imports from third countries (including the United States), with which it has not concluded a free trade agreement. Nevertheless, the government continues to restrict its role in the economy by not levying import tariffs on other goods and by limiting excise taxes to a small range of products. Estonia has completed its privatization program.

4.2.2

Infrastructure Development

IT and Telecommunications The Estonian telecommunications industry, which is led by Eesti Telekom, includes both the fixed line and mobile business. The Estonian mobile communications market is dominated by three operators: EMT (owned by Eesti Telekom); Radiolinja Eesti (owned by Elisa Communications) and Tele2 (owned by Tele2 AB).



Macro-Accessibility

155

Significant investments have been made into the telecommunications infrastructure. Fiber optic cables cover the entire country. Direct undersea connections to Sweden and Finland and links to neighboring Russia and Latvia guarantee first-class international communications. The share of Internet-users is high in comparison to EU countries. Estonia leads the way among the Baltic States in Internet usage -- 43% of the population uses the Internet. For specific information on data communication companies, visit: http://www.ee/www/business/communication/data_communication/welcome.html.

Transportation The Estonian road network is comparable to Nordic countries in terms of its density. The infrastructure along the main highways has been improving rapidly as modern gas stations and better roads have been built. Main routes connect Estonia with Russia in the east and with Latvia in the south. The Via Baltica connects Central and Northern Europe with the Baltics. Domestic transport is dominated by road transport. More than 90% of the freight transit through Estonia is by rail. The shortest route from Russia to Western Europe and to North America is through the Baltic States. The Estonian-Russian border is only 210 km from the Port of Tallinn by railway and 1,100 km from Moscow. The length of the railway system’s operating lines is 968 km, of which 132 km are electrified. Located in the Baltic Sea region, Estonia has captured an increasing share of the rapidly growing trade through the Baltic Sea. There are around 100 ports along the coast of Estonia, 31 of which handle commercial shipping and are open to vessels from other countries. Tallinn International Airport, renovated in 1999, is open to international and domestic flights. International air links with most Scandinavian and European cities have been established.

Energy Estonia is self-sufficient in electric power; its two large oil shale-fired power plants have a generating capacity of about 3000 Megawatts -- about twice Estonia’s domestic demand. Because of its oil shale reserves, Estonia does not need to rely on other sources for fuel. Therefore, renewable energy production is marginal. The power plants are undergoing renovation to bring them into compliance with international environmental standards.

4.3 4.3.1

POLITICAL RISKS The Political System

Estonia is an independent and sovereign democratic republic. Estonia’s government is divided into four branches: a president, the Riigikogu (a unicameral parliament), the government (a cabinet led by the prime minister), and the courts. There is universal suffrage for Estonian citizens over 18 years of age residing in Estonia or abroad. Noncitizen permanent residents have the right to vote in municipal elections but not in national elections. There are fewer than 15 political parties active in Estonia, and party membership is low (compared with the U.S.) but is growing.



Macro-Accessibility

156

All governments to hold power since the general elections in 1992 have proclaimed the development of an open market economy to be the main principle of economic reform.

4.3.2

Economic Relationship with the United States

For Estonia, trade and investment relations with the U.S. are of strategic importance; its security policy is reliant upon economic integration with the West. And, because economic prosperity encourages stability, economic relations between Estonia and the United States play a significant role in the development of a stable and prosperous Europe as a whole. This in turn benefits the United States with a stable market for U.S. companies and a friendly cooperative international partner. The U.S. has implemented several sound policies aimed at strengthening a prosperous trading relationship. Economic policies which have helped guide U.S. - Estonian cooperation include the MFN (Most Favored Nation) regime, the General System of Preferences, and the financing programs of OPIC, U.S. TDA and the U.S. ExportImport Bank. At this time, five economic agreements are in effect between the U.S. and Estonia. More information is available at: http://www.vm.ee/eng/kat_176/412.html.

4.4 4.4.1

MARKETING STRATEGIES Distribution Channel Options

Distribution channels in Estonia are similar to the United States market. Goods may be sold through an agent, distributor, established wholesaler, or by selling directly to retail organizations. Privately owned wholesale and trading houses are particularly strong in certain specialized sectors, such as electronics, electrical components and instruments, pharmaceutical and health care products, technical products and machinery, and raw materials and chemicals.

4.4.2

Agents and Distributors

One exclusive agent/distributor is usually appointed to cover the entire country. Estonian importers often represent several different product lines. In selecting a representative, the exporter should check whether that company handles competing products. There is no clearinghouse of information for finding a partner in Estonia.

4.4.3

Direct Marketing Options

Direct Marketing is both a media and a way of selling. Direct marketing as a media includes direct mail and direct response advertising (press, radio and television, Internet). As a way of selling it covers mail order, direct selling and telemarketing. Both direct sales and mail order sales are showing steady growth in Estonia.



Macro-Accessibility

4.4.4

157

Joint Ventures and Licensing Options

Joint ventures and licensing arrangements with foreign manufactures are allowed and encouraged. Several U.S. companies have established themselves in the Estonian market with subsidiaries and joint ventures. A number of Estonian firms are interested in using their long-established contacts in the former Soviet Union to market U.S. goods. Estonians cite a number of selling points, such as their knowledge of the Russian language, culture and business environment, for using Estonia as a gateway to Russia.

4.4.5

Creating a Sales Office

Commercial operations in Estonia may be performed either as a “physical person” or a “legal person,” and may take one of four forms: 1) A general partnership; 2) A limited partnership; 3) A limited company; or 4) A public limited company. Descriptions of the different forms and English-language guidelines on how to establish such firms in Estonia are available on the Web site of the Estonian Investment Agency (www.eia.ee).

4.4.6

Selling Strategies

Selling factors and techniques are very similar in Estonia to those in the United States. Terms generally applied to international trade with industrial countries apply to selling in Estonia. When selling through a local distributor financing is covered in mutual agreements.

4.4.7

Advertising and Trade Promotion

The Law on Advertising prescribes that advertisements should not be offensive to minorities (race, sex, etc.) Also provisions on child-related advertisements are included. Advertising of tobacco and tobacco products is prohibited; advertising of alcohol is strictly limited.

4.4.8

Trade Promotion

Most of the international fairs take place at the grounds of Estonian Fairs Ltd., located in Tallinn.

4.4.9

Pricing Issues

Products in Estonia are priced using the following method: CIF price + excise tax + profit + value added tax (18%).



Macro-Accessibility

158

Excise tax is levied on raw tobacco and cigarettes, cigars, cigarillos; alcohol and beer; petrol, diesel oil, jet fuel, lubricating engine oil; cars, motorcycles and yachts motor vehicles and package. Tobacco and tobacco products imported to Estonia are assessed when the excise tax tags are bought. The rate of excise duty is the price of the tax tag. The enterprises, having the national license for producing, importing and exporting of tobacco products, have the right to buy the tax tags. The excise tax is imposed on the spirits, alcoholic beverages and beer. Synthetic spirits, by-products of rectification and distilled spirits are not subject to the excise tax. Nearly all imports, as well as domestic production, are subject to the Value Added Tax (VAT). Exemptions from VAT cover medicines, medical goods and equipment for funeral services, goods imported for non-profit purpose and some other specific goods and services the turnover of which is tax-free in Estonia. There are no price controls in Estonia. Supplying Major suppliers normally establish sales offices in Estonia that are supported by dealers. There are also importers/distributors who use a network of dealers to support their marketing efforts. As a rule, one exclusive agent/distributor is appointed to cover the entire country. Estonian importers often represent several different product lines. Importers may serve large customers themselves while dealers work with smaller customers and those located outside Tallinn. Training, usually arranged and carried out by dealers, is an important aspect of customer support. Service points should cover the whole territory and not be limited to the capital.

4.4.10

Public Sector Marketing

Government procurement is governed by the Public Procurement law (January 1, 1996; amended July 1998). Conducted through open tender, government procurement may take place in one of two ways: 1) limited bidding with negotiations, or 2) a government tender open to all bidders. The law regulates public procurement that exceeds $14 500, new construction which exceeds $144 300, or the preparation of a construction site or construction services for more than $36 100. As provided for by the law in case contra versus occur with international agreements entered by the Republic of Estonia, the provisions of the agreement prevail. Sources of Information - Announcements concerning public procurement are through Public Procurement Office and published in daily newspapers.

4.4.11

Intellectual Property Risks

The Estonian legal system protects property rights, including intellectual property. The Copyright Law was established in 1992. The Trademark Law, the Patent Law, and the Utility Model Law were all established in 1994. Estonia adheres to the Bern Convention, the Geneva Convention on the Protection of Phonograms, the Parish Convention, the Patent Cooperation Treaty, the NICE Agreement, the Budapest Treaty on the International Recognition of the Deposit of Microorganisms, WIPO, TRIPS and the Rome Convention. A law amending the Copyright Law, Criminal Code and the Code of Administrative Offences was adopted in 1998. It complies with the EU directives granting protection to authors, performing artists, record producers, and broadcasting organizations. At this time, Estonia does not grant royalties to foreign phonogram producers (including Americans) from countries that are not members of the Rome Convention.



Macro-Accessibility

159

It is recommended that U.S. firms desiring to register their patent or trademark seek the assistance of a reputable attorney experienced in IPR issues. The Association of Estonian Patent Attorneys (EPS) has a list of 25 certified patent attorneys.

Copyrights Copyrights are valid for the lifetime of the artist plus 50 years. There is no application process for nor formal bestowal of copyrights -- it is automatic upon creation of the work.

Patents Patents are granted for 20 years. Application is made at the Estonian Patent Office. Estonia also accepts patent applications (translated into Estonian) from abroad.

Trademarks Applications must be made to the Estonian Patent Office. English language guidelines to apply for a trademark are available from the Estonian Patent Office.

Utility Models Only a device can serve as a subject of a utility model. An application for the registration of utility model can be based on a pending patent application. English language information for registering a utility model may be obtained from the Estonian Patent Office.

4.4.12

Hiring Local Counsel

The use of local attorneys is recommended for U.S. firms planning to operate in Estonia or enter into contracts with Estonian companies. An updated list of Estonian attorneys can be obtained from the American Embassy, Consular Section, Kentmanni 20, 15099 Tallinn, Estonia, tel: 372 66 88 100, fax: 372 66 88 134, www.usemb.ee.

4.5 4.5.1

IMPORT AND EXPORT REGULATION RISKS Trade Barrier Risks

Under Estonian law all companies, regardless of their ownership structure, may carry out foreign trade relations. State-owned enterprises have neither exclusive rights nor special privileges in their purchases or sales involving exports or imports. Currently Estonia is practicing a liberal foreign trade regime with few tariff or non-tariff barriers. As of January 2000, Estonia has imposed import tariffs on agricultural products originating in non-EU countries, including the U.S. The continued success of the external trade regime depends heavily on restructuring and revitalization of companies in the agricultural and industrial sectors.



Macro-Accessibility

4.5.2

160

Valuations on Imports

Goods imported into or exported from Estonia must be cleared through Estonian Customs. The term “import duties and taxes” means - duties and taxes collected on the import of goods or in connection with the import of goods, excluding fees for services. A state fee for customs clearance must be paid on the export and import of goods. On transit through Estonia, goods are not subject to any duties and taxes. Import duties and taxes collected by Estonian Customs include: •

Customs duty

•

Excise duty

•

Value added tax (VAT)

For more information see: http://www.customs.ee/index_eng.html.

4.5.3

Documentation Required for Trade

Licenses are required for importing and exporting: metals; fuel; spirits; tobacco and tobacco goods; pharmaceuticals; weapons, ammunition, explosives; lottery tickets and private passenger vehicles. The license requirement applies equally to domestic and foreign firms, and licenses are issued to those firms that apply and that fulfill the application requirements. The licenses do not establish quantitative restrictions. Licenses are obtained from the Ministry of Economy. Imports/exports must be cleared in writing, using the forms provided by the National Customs Board of Estonia. The customs declaration must be filled out by the holder of the goods or by a declarant who has been granted adequate authority by the Customs Board.

4.5.4

Entering Temporary Imports

Goods transiting Estonian territory are not charged duties. It is possible to obtain a temporary exemption from duty for items such as commercial samples, and for goods intended for public displays at exhibitions and fairs. If the goods are put to any unauthorized use or are not re-exported within the prescribed time period (a maximum of one year) they must go through normal customs clearance and become liable for relevant duties and taxes.

4.5.5

Labeling Issues

The following information, in Estonian, is required on the retail packaging, or otherwise marked on the product (a sticker, label, etc.): •

Name of product (indicating clearly the contents of the package)

•

Name of the manufacturer or the name of the company that had the product manufactured

•

Amount of contents (weight or volume of the contents to be specified, measures in metric system)



Macro-Accessibility

161

If warranted, the following information should also be included on the retail packaging or otherwise clearly identified on the product: contents of the product, care instructions, operating instructions, and a warning of possible danger related to the use or disposal of the product. A retail-size food package must show the same name of the manufacturer, packer or importer, commercial name of the product, net metric weight or volume, ingredients in descending order of weight, last recommended date of sale, and storage instructions if perishable or intended for infants. This information described above must be provided in Estonian.

4.5.6

Restrictions on Imports

There are no prohibited imports.

4.5.7

Local Standards

Estonian standards for imported goods are being developed and are based on those of the ISO (International Standards Organization). It is highly recommended that U.S. products imported into Estonia meet international or European standards. The central body for standardization in Estonia is the National Standards Board of Estonia.

4.5.8

Free Trade Zone Options

There is no free port in Estonia. However, there are 130 public bonded warehouses and 22 private bonded warehouses. In addition to these warehouses, there are 15 free economic zones in which warehousing, processing and assembly are allowed.

4.5.9

Additional Trade Issues

The import and export of plant and plant products is permitted only with an accompanying phytosanitary certificate issued by the Estonian Plant Guarantee Inspection Board or competent foreign authorities. These goods may be imported or exported only at specified border crossings. The import and export of livestock, fish, fowl, aquatic organisms, animal and poultry products, animal feed and its components and veterinary and biopreparations are subject to state control and enforced by the Estonian Veterinary Control Border Inspection. Special conditions exist for importing or exporting the following products: cultural artifacts; precious metals, stones and articles containing these; medicinal products; weapons; explosives; radio broadcast equipment; rare species of plant and animals; goods subject to veterinary, food and phytosanitary control; plant preservatives; narcotic drugs and psychotropic substances; foreign currency and securities; equipment and means for recording of audiovisual production; lottery tickets; strategic goods; radioactive radiation sources; motor vehicles; building cement; and dangerous and other waste.



Macro-Accessibility

4.5.10

162

Adherence to Free Trade Agreements

Estonia has entered free trade agreements with: Switzerland, Latvia, Lithuania, Norway, Ukraine, the Czech Republic, the Slovak Republic, Turkey, Slovenia, Denmark, the Faro Islands, and Poland. Free trade negotiations have been started with Bulgaria and Romania. Because it has successfully concluded EU accession negotiations, Estonia will comply with those trade agreements that the EU has made with third countries.

4.6 4.6.1

INVESTMENT CLIMATE Openness to Foreign Investment

Estonia’s government maintains a highly favorable attitude towards foreign investment, which is governed by the “Law on Foreign Investments” enacted in 1991 shortly after re-gaining independence. The Government has sought to maintain liberal policies and establish free trade agreements in order to attract investments that could produce exports. Estonia’s economy is arguably the most open in Europe. Estonia became a full member of the European Union on May 1, 2004. Estonia’s government does not screen foreign investments. It does, however, establish requirements for certain sectors. These requirements are not intended to restrict foreign ownership but only to regulate it and establish clear ownership responsibilities. Licenses are required for a foreign investor to become involved in: mining, energy, gas and water supply, railroad and transport, waterways, ports, dams and other water-related structures, and telecommunications and communication networks. The Estonian central bank issues licenses for foreign interests seeking to invest in or establish a bank. Government review and licensing have proven to be routine and nondiscriminatory. Estonia’s openness to foreign direct investment extends to its privatisation program, which is now complete. Only a small number of enterprises -- the country’s main port, the power plants, the postal system, the national lottery etc. -remain state-owned.

4.6.2

Conversion and Transfer Policies

Estonia has been under a currency board arrangement since 1992. Initially pegged to the German mark, the Estonian kroon (EEK) has been fixed to the Euro at EEK 15.65 since January 1999. The Estonian currency has no restrictions on its transfer or conversion. Similarly, there are no restrictions, limitations or delays involved in converting or transferring funds associated with an investment (including remittances of investment capital, earnings, loan repayments, or lease payments) into hard currencies at market rates. There is no limit on dividend distributions as long as they correspond to a company’s official earnings records. If a foreign company ceases to operate in Estonia, all its assets may be repatriated without restriction. These policies are all long-standing; there is no indication that they will be altered in any way. Foreign exchange is readily available for any purpose.



Macro-Accessibility

4.6.3

163

Expropriation and Compensation

Private property rights are observed in Estonia. There have been no cases of expropriation or nationalization since the country regained its independence in 1991.

4.6.4

Dispute Settlement

Disputes concerning investments have not been a problem since Estonia regained independence in 1991. There is no record of any significant investment dispute during the last decade. Estonia’s judiciary is independent and insulated from government influence. Property rights and contracts are enforced by the courts. In the past, judicial decisions were occasionally arbitrary and indifferent to the law. Such decisions are increasingly rare. Estonia’s Commercial Law has proven extremely effective and is often cited as one of the key factors that has contributed to Estonia’s successful economic reforms. The Commercial Code is consistently applied. The new Obligation Law, enacted in 2002, is the basis for all commercial agreements. Estonia has been a member of the International Center for the Settlement of Investment Disputes since 1992, and a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards since 1993.

4.6.5

Performance Requirements and Incentives

A fundamental principle of Estonia’s economic policy is that foreign and domestic capital is treated identically. No special investment incentives are available to foreign investors, nor is any favored treatment accorded them. Similarly, there are no specific performance requirements identified with foreign investments that differ from domestic investments. Estonia continues to refine its immigration policies and practices. U.S. citizens are exempt from the quota regulating immigration and residence permits, as are citizens of the EU and Switzerland. Estonia imposes few tariffs except for those on a number of agricultural products imported from non-EU countries, including the U.S. (Note: More tariffs will be levied when Estonia becomes a member of the EU in order to harmonize with EU tariff levels. End Note.) Additionally, a uniform value-added tax is levied on imports. In cases where these products are directly re-exported or used as inputs, the tax can be refunded. Excise taxes are also levied on a limited range of goods including alcohol, tobacco products, gasoline, motor vehicles, boats and various luxury goods. There is no corporate income tax on profits reinvested in Estonia. This tax strategy was designed to promote business and accelerate economic growth by making additional funds available for investments.

4.6.6

Right to Private Ownership and Establishment

Private ownership and entrepreneurship are respected in Estonia. In most fields of business, participation by foreign companies or individuals is unrestricted. As provided for by the Law on Foreign Investments, foreign investors have



Macro-Accessibility

164

the same rights and obligations as Estonian citizens. Foreign investors may purchase buildings and land for production purposes and establish, buy and fully own companies. Government approval is required for foreign investment and participation in only a handful of sectors. Competitive equality is the official standard applied to private enterprises in competition with public enterprises. Private companies do not face discrimination in relation to state-owned companies.

4.6.7

Intellectual Property Risks

Secured interests in property, both chattel and real, are recognized and enforced. Mortgages are quite common for both residential and commercial property and leasing as a means of financing is widespread and efficient. The legal system protects and facilitates acquisition and disposition of all property rights, including land, buildings and mortgages. The long and complicated process of restitution is almost complete, including the area of nonresidential real properties. The Estonian legal system adequately protects property rights, including intellectual property, patterns, copyrights, trademarks, trade secrets and industrial design. Estonia adheres to the Berne Convention, WIPO and TRIPS, the Rome Convention and the Geneva Convention on the Protection of the Rights of Producers. Estonian legislation fully complies with EU directives granting protection to authors, performing artists, record producers, and broadcasting organizations. In 2002 Estonia withdrew its reservation on Article 12 of the Rome Convention, thus extending equal treatment to domestic and foreign phonogram producers. (Note: However, because the U.S. is not a member of the Rome convention, equal treatment is not extended to U.S. phonogram producers under this agreement. End Note.)

4.6.8

Transparency of the Regulatory System

The Government has set out transparent policies and effective laws to foster competition and establish “clear rules of the game.” However, due to the small size of Estonia’s commercial community, instances of favoritism are not uncommon despite the regulations and procedures that are designed to limit it. Tax, labor, health and safety laws and policies have been crafted to encourage investment. While there is always room for more, the level of foreign direct investment per capita suggests that Estonia has been successful in designing a legal framework that attracts rather than discourages foreign investment. Given the legacy of 50 years of Soviet occupation and the challenges of creating a modern bureaucracy in a relatively brief time frame, it is not surprising that some vestiges of the former system remain, especially at lower levels of the bureaucracy. Computerization, widespread Internet usage and E-Government have contributed significantly to end these practices. Estonia’s bureaucratic procedures are considered far more streamlined and transparent than those of other countries in the region.

4.6.9

Capital Market Risks

Estonia’s financial sector is modern and efficient. Government and Central Bank policies facilitate the free flow of financial resources, thereby supporting the flow of resources in the product and factor markets. Credit is allocated on market terms and foreign investors are able to obtain credit on the local market although they often look elsewhere in



Macro-Accessibility

165

search of better terms. The private sector has access to an expanding range of credit instruments similar in variety to those offered by banks in Estonia’s Nordic neighbors. Legal, regulatory and accounting systems are transparent and consistent with international norms. The Security Market Law complies with EU requirements and enables EU securities brokerage firms to deal on the market without establishing a local subsidiary. In 2002, the Helsinki Stock Exchange (Finland) bought a controlling interest in the Tallinn Stock Exchange, merging the two entities, thus making the small market more attractive to foreign investors. Estonia’s banking system has consolidated rapidly. Seven banks operate in Estonia, including one branch of a foreign bank. Two representative offices of foreign banks were established in 2002, bringing the total number of representative offices to eight. Estonia’s commercial banking system is regarded as sound and well regulated. Increasing numbers of Estonian firms have been purchased by foreign interests. Many locally owned enterprises have recognized that, due to the Estonian economy’s small size and openness, the only way they can be regionally and internationally competitive is to bring in foreign capital and management expertise.

4.6.10

Political Violence

Estonia has not experienced any politically motivated damage to projects or installations.

4.6.11

Corruption

Estonia has laws, regulations and penalties to combat corruption and it has generally not been a problem faced by foreign investors. Instead, foreign companies have often found it difficult to insinuate themselves into the local commercial community where many Estonian executives have known one another since childhood and often help one another out in ways that make it difficult for outsiders to compete effectively. Both offering and taking bribes are criminal offenses. While “payments” that exceed the services rendered are not unknown, and “conflict of interest” is not a well-understood issue, surveys of American and other non-Estonian businesses have shown the issues of corruption and/or protection rackets are not an important concern for these companies.

4.6.12

Bilateral Investment Agreements

Estonia has bilateral investment promotion and protection agreements with the United States, Switzerland, Germany, Great Britain, the Czech Republic, Austria, Ukraine, Belgium-Luxembourg, Turkey, Italy, Spain and Greece. A Bilateral Taxation Treaty with the U.S. came into force on January 1, 2000.

4.6.13

OPIC and Other Investment Insurance

Estonia is a member of the Multilateral Investment Guarantee Agency.



Macro-Accessibility

4.6.14

166

Labor

The Estonian labor force is highly skilled and well educated. There are 14 universities, 19 higher education colleges and 114 technical secondary institutions, all combining to produce graduates with adequate technical skills, and fluent in English, Russian, German and other languages. Over 17% of the population has received post-secondary education; this number is growing rapidly. The influence of trade unions, which tend to take a co-operative approach to both industrial relations, is slowly increasing. With an aging population and a negative birth rate, Estonia, like many other countries of Central and Eastern Europe, faces serious demographic challenges affecting its labor supply in the longer term. Improving labor efficiency is a key focus for Estonia’s efforts in the near- and mid-term for increasing the productivity of its work force. Estonia adheres to the ILO Convention that protects worker rights, and the effect of labor factors on the use of technology.

4.6.15

Free Trade Zone Options

There is no free port in Estonia. However, there are 130 public bonded warehouses and 22 private bonded warehouses. In addition to these warehouses, there are 15 free economic zones in which warehousing, processing and assembly are allowed.

4.7 4.7.1

TRADE AND PROJECT FINANCING The Banking System

Estonia has the strongest, most developed banking system in the Baltic States. In part this has been due to the autonomy accorded to the Central Bank and its supervision over the country’s commercial banks. Estonia’s banking sector is closely monitored by the IMF and international risk rating agencies. The country has adopted a universal banking model that allows banks to participate in other financial activities including operating leasing, insurance and brokerage. There have been no recent bank failures. Currently the Estonian banking system is dominated by two foreign controlled banking groups: Hansapank (Swedbank) and Uhispank (Skandinaviska Enskilda Banken). In all, there are seven licensed commercial banks, including the branches of Finnish Nordea and Sampo Bank. Major Estonian commercial banks service the whole country through their branch networks. They also manage individual subsidiaries that engage in mortgage banking, finance company activities, credit card business, investment operations etc. Commercial banks have extensive foreign networks of branch offices, subsidiaries, consortium banks and representative offices through which foreign trade payments are effected. Over 90% of banking transactions are done electronically and more than 53% of the population uses Internet banking



Macro-Accessibility

4.7.2

167

Foreign Exchange Control Risks

There are no foreign exchange controls in Estonia.

4.7.3

General Financing Availability

The Estonian financial market is a typically European environment where banks and financing institutions have the dominant role.

4.7.4

Financing Export Strategies

Financing and guarantees for exports are provided by the Government-owned Foundation for Export Credits and Guarantees. Depending on the nature of the goods exported and on the risks of the trading partners, a portion of the export costs must be provided by the company in question. In addition to government activities, commercial banks provide financing for exports, when possible with guarantees. The banks advise their customers on bank loans as well as on loans granted by other credit institutions. Additionally, ExIm Bank administers various programs for providing financing for U.S. exports to Estonia.

4.7.5

Banks with Correspondent Banking Arrangements

All Estonian commercial banks have extensive correspondent relationships with U.S. banks -- in every U.S. state as well as in most of the larger financial centers. Further information on correspondent relationship can be obtained from the Estonian Bankers’ Association.

4.8 4.8.1

TRAVEL RISKS Local Business Practices

Estonia is a modern, post-Soviet country that enjoys close relations with Nordic and other Baltic countries. Social and business protocol is similar to that in northern Europe.

4.8.2

Travel Issues

U.S. citizens do not need to obtain a visa for visits of less than 90 days. To live and work in Estonia, a foreigner needs both a residence permit and a work permit, both of which may be obtained from the local Migration Departments. English-language instructions on how to apply are available from the Migration Department. Alternatively, instructions are posted in English on the web page of the Estonian Investment Agency (www.eia.ee).



Macro-Accessibility

4.8.3

168

Infrastructure for Conducting Business

Transportation Estonia has a relatively well-developed transportation infrastructure. The density of Estonia’s road network is comparable to that of the Nordic countries. Public transportation in major cities is efficient and reliable. While there are five passenger-serving airports in Estonia, all international flights occur through Tallinn Airport.

Language The official language in Estonia is Estonian. English is increasingly spoken, especially in the capital city. Russian is still the most-widely spoken second language, although less so among younger Estonians.

Communications Telecommunication is one of the fastest growing sectors in the Estonian economy. International phone calls can be made from Estonia to almost 100 countries. The mobile phone networks, which cover the entire territory of Estonia, are undergoing a phase of intense development.

Housing The majority of people in Estonia own their own housing. About 30% of the population lives in rental housing. The rent of an apartment depends on its location, size, condition and age. Rents are relatively high and prices for apartments and houses are also high. Apartments are rented both furnished and unfurnished.

Health While medical facilities are available throughout Estonia, medical standards are still uneven. Private clinics are service-friendly, but not always equipped for emergencies.

Estonian Food Typical Estonian dishes rely heavily on pork, potatoes and garden vegetables. Spicy Estonian foods are unheard of. However the variety of available cuisine is expanding rapidly.

4.8.4

Country Data Population Population growth rate Religion Government system Language Work week


1.4 million -1.1 annual average Lutheran, Orthodox, other Republic Estonian Five-day work week


Macro-Accessibility

4.9 4.9.1

169

KEY CONTACTS U.S. and Local Contacts Central and Eastern European Business Information Center (CEEBIC)/Commercial Service United States Embassy Kentmanni 20 15099 Tallinn Estonia Tel: 372-66 88 130 Fax: 372-66 88 134 www.usemb.ee Contact: Ms. Reene Sepp, Commercial Specialist (Tallinn) E-mail: [email protected] or Ms. Karen Pilmanis, SCO (the Senior Commercial Officer for the Baltics, resident in Riga) Tel: 371 703 6200 Fax: 371 782 0047 E-mail: Karen. [email protected] U.S. Embassy, Economic Section Kentmanni 20 15099 Tallinn Estonia or PSC 78, Box H APO AE 09723 Tel: 372-66 88 100 Fax: 372-66 88 134 Foreign Agricultural Service Strandvägen 101 115 89 Stockholm, Sweden Tel: 46-8-783 5389 Fax: 46-8-662 8495 Ms. Lana Bennett, Agricultural Counselor Ms. Gunilla Törnquist, Agricultural specialist Foreign Agricultural Service 7, Raina Boulvard Riga, LV-1510, Latvia Tel: 371 703 6200 Fax: 371 722 7390 E-mail: [email protected] Ms. Jolanta Andersone



Macro-Accessibility

4.9.2

170

Chambers of Commerce Estonian Chamber of Commerce and Industry Toom-Kooli 17, 10130 Tallinn, Estonia Tel: 372 646 0244 Fax: 372 646 0245 E-mail: [email protected] www.koda.ee Estonian Chamber of Commerce of Agriculture (CCA) J.Vilmsi 53B, 10147 Tallinn, Estonia Tel: (372) 600 9349 Fax (372) 600 9350 E-mail: [email protected] American Chamber of Commerce Harju 6, 10130 Tallinn, Estonia Tel: 372 631 0522 Fax: 372 631 0521 E-mail: [email protected] www.acce.ee WTC Tallinn Ltd. Ahtri 8, 10151 Tallinn, Estonia Tel: 372 6261 020 Fax: 372 6261 019 E-mail: [email protected] www.wtc.ee

4.9.3

Trade Associations Association of Estonian Food Industry Gonsiori 29, 10147 Tallinn, Estonia Tel: 372 648 6073, Fax: 372 631 2718, http://www.toiduliit.ee/eng/structure/ Association of Estonian Fruit and Vegetable Wholesalers Pärnu mnt. 139c-513, 11317 Tallinn, Estonia Tel: 372 50 66 339 Fax: 372 556 974 E-mail: [email protected] BSA (Business Software Alliance) Mustamae tee 55, 10621 Tallinn, Estonia Tel: 372 656 6376 E-mail: [email protected] www.bsa.ee



Macro-Accessibility

171

Estonian Authors Society Lille 13, 10614 Tallinn, Estonia Tel. 372 6 684 360, 372 6 684 362 Faks +372 6 684 361 E-mail: [email protected] www.eauthors.ee Association of Estonian Patent Attorneys Lai 10, 10133 Tallinn, Estonia Tel: 372 6406 600 Fax. 372 6406 604 E-mail: [email protected] Estonian Banking Association Ahtri 12, 10151 Tallinn, Estonia Tel: 372 611 6567 Fax: 372 611 6568 www.pangaliit.ee Federation of Estonian Engineering Industry (EML) Mustamäe tee 4 Tallinn, 10621 Estonia Tel: 372 611 5893 Tel/Fax: 372 656 6640 E-mail: [email protected] Estonian Fairs Ltd. Pirita tee 28, 10127 Tallinn Tel: 372 6137 337 Fax: 372 6137 447 www.fairs.ee Tartu Science Park Riia 185, 51014 Tartu, Estonia Tel: 372 7 383 005 Fax: 372 7 383 041 http://www.park.tartu.ee/

4.9.4

Estonian Government Agencies Ministry of Economic Affairs Harju 11, 15072 Tallinn, Estonia Tel: 372 625 6304 Fax: 372 631 3660 E-mail: [email protected] www.mkm.ee



Macro-Accessibility

172

Ministry of Agriculture Lai 39/41, 15056 Tallinn, Estonia Tel: 372 625 6101 Fax: 372 625 6200 http://www.agri.ee/eng/ Estonian Investment Agency Roosikrantsi 11, 10119 Tallinn, Estonia Tel: 372 627 9420 Fax: 372 627 9427 E-mail: [email protected] www.eia.ee Estonian Technology Agency Roosikrantsi 11, 10119 Tallinn, Estonia Tel: 372 627 9400 Fax: 372 627 9427 E-mail: [email protected] http://www.hightechestonia.com/ National Customs Board Lõkke 5, 15175 Tallinn, Estonia Tel: 372 696 7711 Fax: 372 696 7727 E-mail: [email protected] www.customs.ee Statistical Office of Estonia Endla 15, 15174 Tallinn, Estonia Information: (372) 62 59 300 Tel: (372) 62 59 202 Fax: (372) 62 59 370 E-mail: [email protected] www.stat.ee Consumer Protection Board Kiriku 4, 15071 Tallinn, Estonia Tel: 372 620 1700 Fax: 372 620 1701 E-mail: [email protected] http://www.consumer.ee/ Estonian Patent Office Toompuiestee 7, 15041 Tallinn, Estonia Tel: 372 627 7900 Fax: 372 645 1342 E-mail: [email protected] or [email protected] www.epa.ee



Macro-Accessibility

173

Public Procurement Office Kiriku 2/4, 10130 Tallinn, Estonia Tel: 372 620 1810 Fax: 372 631 1602 http://www.rha.gov.ee/ National Standards Board Aru 10, 10317 Tallinn, Estonia Tel: 372 651 9200 Fax: 372 651 9220 E-mail: [email protected] http://www.evs.ee/index.php3?lk=english

4.9.5

Commercial Banks Hansapank Hansabank Liivalaia 8, 15040 Tallinn, Estonia Tel: 372 631 0310 Fax. 372 631 0410 www.hansa.ee Eesti Ühispank Union Bank of Estonia Tornimäe 2, 15010 Tallinn, Estonia Tel: 372 665 5100 Fax: 372 665 5102 www.eyp.ee Sampo Pank (former Optiva Bank) Sampo Bank Narva mnt. 11, 10151 Tallinn, Estonia Tel: 372 630 2100 Fax: 372 630 2200 www.sampo.ee Eesti Krediidipank Estonian Credit Bank Narva mnt. 4, 15014 Tallinn, Estonia Tel. 372 669 0900 Fax: 372 669 0037 www.krediidipank.ee Tallinn Äripank Vana-Viru 7, 10111 Tallinn Tel: 372 668 8000 Fax: 372 668 8001 E-post: [email protected] www.tbb.ee



Macro-Accessibility

174

Preatoni Pank Preatoni Bank Roosikrantsi 2, 10119 Tallinn, Estonia Tel: 372 611 0500 Fax: 372 611 0501 www.preatonibank.ee Nordea Bank, Plc Tallinna Filiaal (former Merida) Hobujaama 4, 10151 Tallinn Tel: 372 628 3200 Fax: 372 628 3201 www.nordea.ee

4.9.6

Contacts in Washington D.C. Ms. Melissa Wilson, Baltic Desk Officer U.S. Department of Commerce Ronald Reagan Building Washington, D.C. 20230 Tel: 202-482-4915 Fax: 202-482-4505 E-mail: [email protected]

4.9.7

Market Research Firms Saar Poll OÜ Veetorni 4, 10119 Tallinn, Estonia Tel: 372 631 1302 Fax. 372 631 2486 www.saarpoll.ee BMF-Baltic Media Facts Ahtri 12, 10151 Tallinn, Estonia Tel: 372 626 8400 Fax: 372 626 8401 E-mail: [email protected] www.bmf.ee EMOR Ahtri 12, 6th floor, 10151 Tallinn, Estonia Tel: 372 626 8500 Fax: 372 626 8501 E-mail: [email protected] www.emor.ee Market research done by the Post: http://www.mac.doc.gov/ceebic/countryr/Estonia/market.htm



175

5 5.1

DISCLAIMERS, WARRANTEES, AGREEMENT PROVISIONS

AND

USER

DISCLAIMERS & SAFE HARBOR

Summary Disclaimer. This publication ("Report") does not constitute legal, valuation, tax, or financial consulting advice. Nor is it a statement on the performance, management capability or future potential (good or bad) of the company(ies), industry(ies), product(s), region(s), city(ies) or country(ies) discussed. It is offered as an information service to clients, associates, and academicians. Those interested in specific guidance for legal, strategic, and/or financial or accounting matters should seek competent professional assistance from their own advisors. Information was furnished to Icon Group International, Inc. ("Icon Group"), and its subsidiaries, by its internal researchers and/or extracted from public filings, or sources available within the public domain, including other information providers (e.g. EDGAR filings, national organizations and international organizations). Icon Group does not promise or warrant that we will obtain information from any particular independent source. Published regularly by Icon Group, this and similar reports provide analysis on cities, countries, industries, and/or foreign and domestic companies which may or may not be publicly traded. Icon Group reports are used by various companies and persons including consulting firms, investment officers, pension fund managers, registered representatives, and other financial service professionals. Any commentary, observations or discussion by Icon Group about a country, city, region, industry or company does not constitute a recommendation to buy or sell company shares or make investment decisions. Further, the financial condition or outlook for each industry, city, country, or company may change after the date of the publication, and Icon Group does not warrant, promise or represent that it will provide report users with notice of that change, nor will Icon Group promise updates on the information presented. Safe Harbor for Forward-Looking Statements. Icon Group reports, including the present report, make numerous forward-looking statements which should be treated as such. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995, and similar local laws. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's, city's, country's or industry's actual results or outlook in future periods to differ materially from those forecasted. These risks and uncertainties include, among other things, product price volatility, exchange rate volatility, regulation volatility, product demand volatility, data inaccuracies, computer- or software-generated calculation inaccuracies, market competition, changes in management style, changes in corporate strategy, and risks inherent in international and corporate operations. Forward-looking statements can be identified in statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate,'' "estimate," "expect,'' "project,'' "intend,'' "plan,'' "feel", "think", "hear," "guess," "forecast," "believe," and other words and terms of similar meaning in connection with any discussion of future operating, economic or financial performance. This equally applies to all statements relating to an industry, city, country, region, economic variable, or company financial situation. Icon Group recommends that the reader follow the advice of Nancy M. Smith, Director of SEC's Office of Investor Education and Assistance, who has been quoted to say, "Never, ever, make an investment based solely on what you read in an online newsletter or Internet bulletin board, especially if the investment involves a small, thinly-traded company that isn't well known … Assume that the information about these companies is not trustworthy unless you can prove otherwise through your own independent research." Similar recommendations apply to decisions relating to industry studies, product category studies, corporate strategies discussions and country evaluations. In the case of Icon Group reports, many factors can affect the actual outcome of the period discussed, including exchange rate volatility, changes in accounting standards, the lack of oversight or comparability in accounting standards, changes in economic conditions, changes in competition, changes in the global economy, changes in source data quality, changes in reported data quality, changes in methodology and similar factors. Information Accuracy. Although the statements in this report are derived from or based upon various information sources and/or econometric models that Icon Group believes to be reliable, we do not guarantee their accuracy, reliability, quality, and any such information, or resulting analyses, may be incomplete, rounded, inaccurate or condensed. All estimates included in this report are subject to change without notice. This report is for informational purposes only and is not intended as a recommendation to invest in a city, country, industry or product area, or an offer or solicitation with respect to the purchase or sale of a security, stock, or financial instrument. This report does not take into account the investment



Disclaimers, Warrantees, and User Agreement Provisions

176

objectives, financial situation or particular needs of any particular person or legal entity. With respect to any specific company, city, country, region, or industry that might be discussed in this report, investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the information in this report. Investing in either U.S. or non-U.S. securities or markets entails inherent risks. In addition, exchange rate movements may have an effect on the reliability of the estimates provided in this report. Icon Group is not a registered Investment Adviser or a Broker/Dealer.

5.2

ICON GROUP INTERNATIONAL, INC. USER AGREEMENT PROVISIONS

Ownership. User agrees that Icon Group International, Inc. ("Icon Group") and its subsidiaries retain all rights, title and interests, including copyright and other proprietary rights, in this report and all material, including but not limited to text, images, and other multimedia data, provided or made available as part of this report ("Report"). Restrictions on Use. User agrees that it will not copy nor license, sell, transfer, make available or otherwise distribute the Report to any entity or person, except that User may (a) make available to its employees electronic copies of Report, (b) allow its employees to store, manipulate, and reformat Report, and (c) allow its employees to make paper copies of Report, provided that such electronic and paper copies are used solely internally and are not distributed to any third parties. In all cases the User agrees to fully inform and distribute to other internal users all discussions covering the methodology of this Report and the disclaimers and caveats associated with this Report. User shall use its best efforts to stop any unauthorized copying or distribution immediately after such unauthorized use becomes known. The provisions of this paragraph are for the benefit of Icon Group and its information resellers, each of which shall have the right to enforce its rights hereunder directly and on its own behalf. No Warranty. The Report is provided on an "AS IS" basis. ICON GROUP DISCLAIMS ANY AND ALL WARRANTIES, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, RELATING TO THIS AGREEMENT, PERFORMANCE UNDER THIS AGREEMENT, THE REPORT. Icon Group makes no warranties regarding the completeness, accuracy or availability of the Report. Limitation of Liability. In no event shall Icon Group, its employees or its agent, resellers and distributors be liable to User or any other person or entity for any direct, indirect, special, exemplary, punitive, or consequential damages, including lost profits, based on breach of warranty, contract, negligence, strict liability or otherwise, arising from the use of the report or under this Agreement or any performance under this Agreement, whether or not they or it had any knowledge, actual or constructive, that such damages might be incurred. Indemnification. User shall indemnify and hold harmless Icon Group and its resellers, distributors and information providers against any claim, damages, loss, liability or expense arising out of User's use of the Report in any way contrary to this Agreement. © Icon Group International, Inc., 2006. All rights reserved. Any unauthorized use, duplication or disclosure is prohibited by law and will result in prosecution. Text, graphics, and HTML or other computer code are protected by U.S. and International Copyright Laws, and may not be copied, reprinted, published, translated, hosted, or otherwise distributed by any means without explicit permission. Permission is granted to quote small portions of this report with proper attribution. Media quotations with source attributions are encouraged. Reporters requesting additional information or editorial comments should contact Icon Group via email at [email protected]. Sources: This report was prepared from a variety of sources including excerpts from documents and official reports or databases published by the World Bank, the U.S. Department of Commerce, the U.S. State Department, various national agencies, the International Monetary Fund, the Central Intelligence Agency, and Icon Group International, Inc.



Disclaimers, Warrantees, and User Agreement Provisions

177

END



Renewable Energy Projects in Estonia: A Strategic Reference, 2006

Renewable Energy Equipment in Poland: A Strategic Reference, 2007

Wind Energy Equipment in India: A Strategic Reference, 2006

Energy Production and Services in Finland: A Strategic Reference, 2006

Renewable Energy Equipment and Services in India: A Strategic Reference, 2006

Biotechnology in Japan: A Strategic Reference, 2006

Defense in Mexico: A Strategic Reference, 2006

Biotechnology in Brazil: A Strategic Reference, 2006